China’s Consumer Market Shows Steady Recovery, Signaling No Need for Large-Scale Stimulus

BEIJING – China’s consumer market has demonstrated a robust recovery, indicating that policymakers are unlikely to implement the extensive stimulus measures that investors have been anticipating. The recent nine-day Lunar New Year festivities, which concluded on Monday, witnessed a consistent surge in consumer spending across various sectors, from hotel reservations to duty-free purchases. Notably, the rail network experienced unprecedented demand, with a single day recording over 18.7 million passengers, a new record.

These positive economic indicators suggest that the recent policy interventions by Beijing have been effective. Furthermore, they underscore a significant consumer trend: the continued acceleration of spending on experiences, such as travel and entertainment, outpacing the growth in traditional goods. This observation was highlighted in a report released on Tuesday by CCB International Securities.

Since the pandemic, China’s retail sales have exhibited a degree of sluggishness. In contrast to countries like the United States, which provided direct cash handouts to consumers, Beijing has opted for more targeted support mechanisms, including trade-in programs and vouchers. While Chinese authorities have increasingly emphasized the importance of augmenting consumer incomes, concrete details regarding such initiatives have yet to be fully unveiled. This approach is not expected to change significantly in the immediate future.

Analysts at CCB International Securities anticipate that policymakers will leverage the positive momentum generated during the holiday period. They project the introduction of "targeted, incremental easing" around the upcoming March "Two Sessions," referring to the annual parliamentary meetings scheduled to commence next week. This strategic approach aims to stabilize market expectations and sustain the ongoing economic recovery. Chinese Premier Li Qiang is slated to announce the nation’s economic targets and key policy priorities for the year on March 5.

Despite the resurgence in travel, consumers have maintained a cautious approach to spending, remaining price-sensitive. Official holiday figures, released late Tuesday, indicated that daily tourism trips nationwide grew by an average of 5.7% compared to the previous year, aligning with the growth observed in 2025. Although overall spending climbed by 5.5%, this represents a deceleration from the 7% growth recorded in 2025.

Lillian Lou, a Morgan Stanley Equity Analyst, noted in a report on Wednesday that these trends reflect improved sentiment stemming from a longer holiday period, but that consumers generally remain budget-conscious. Further underscoring persistent deflationary pressures, an analysis of official data by CNBC revealed a 0.2% decrease in average spending per tourist trip during the holiday period compared to the previous year.

In an effort to stimulate consumer spending, China extended the official Lunar New Year holiday by one day this year. Many individuals also utilized personal leave to extend their breaks, suggesting that the official figures may not fully encompass the total spending picture. Jihong He, chief strategy officer at H World Group, a prominent hotel operator in China, stated that the extended holiday encouraged families to travel together. This trend, according to He, is driving demand for larger rooms and family-friendly accommodations designed for shared experiences.

H World Group operates over 12,000 hotels across more than 30 brands in mainland China. During the Lunar New Year, the company reported that its top 10 destinations, with hotel occupancy rates exceeding 90%, were predominantly located in southern or coastal cities. Sanya, situated in the tropical island province of Hainan, was among these popular locations. In December, China expanded its zero-tariff policy for Hainan to further promote the purchase of duty-free luxury goods within the mainland. Official statistics showed that Hainan’s duty-free sales during the holiday period surged by 30.8% year-on-year, reaching 2.72 billion yuan (approximately $400 million).

Fliggy, a travel booking platform owned by Alibaba, reported that bookings for hotel and theme park packages during the holiday season more than doubled compared to the previous year. The company also noted a significant increase in bookings for more remote and scenic destinations, with locations such as Altay in Xinjiang and Pu’er in Yunnan experiencing more than a twofold rise in bookings.

China has been actively promoting its expanding services sector. This month, the National Bureau of Statistics announced that it would be giving greater weight to services in its consumer price index (CPI) compared to the previous base period of 2020. Bruce Pang, an adjunct associate professor at CUHK Business School, observed that even consumer goods in China are increasingly oriented towards dining and social activities. Pang emphasized that consumer confidence in income and employment prospects, rather than mere shopping promotions, is the crucial factor for consumption recovery. He recommended that policymakers should focus more intently on these long-term issues.

In the autumn, China’s top leaders pledged to bolster consumption over the next five years and subsequently indicated a prioritization of domestic demand. Analysts at CCB noted that local governments in China issued over 2.05 billion yuan in consumption vouchers and subsidies prior to the holiday, effectively establishing a "floor under demand." However, Liqian Ren, director of Modern Alpha at U.S.-based fund manager WisdomTree, cautioned that prioritizing consumption does not necessarily translate into broad-based stimulus. Ren suggests that Beijing’s focus is primarily on preventing consumption growth from falling below a certain threshold, projecting sector growth in the range of approximately 2% to 3%.