BEIJING: Robust recovery in consumer spending in China during the Spring Festival holiday in late January has brightened hopes that the release of pent-up demand will inject strong impetus into the country’s economic rebound, experts say.

They commented after new data showed that consumer spending picked up steam across the board during the holiday, when sales of retail and catering enterprises monitored by the Commerce Ministry expanded by 6.8% year-on-year (y-o-y).

The ministry said that it will put resuming and expanding consumption high on its agenda this year after holding a work meeting. It also pledged stepped-up efforts to stabilise foreign trade and attract more foreign investment.

During the week-long holiday, domestic tourism revenue rose 30% y-o-y to 375.84 billion yuan (US$55.62bil or RM237.3bil), or 73% of the level seen in 2019. Cinemas witnessed a y-o-y growth of nearly 12% in their box-office receipts, official data showed.

“The data indicate that after Covid control measures were optimised, demand for consumption and travel rebounded strongly.

“All it takes is more time to return (to pre-pandemic levels),” said Shao Yu, chief economist at Orient Securities.

Sean Taylor, chief investment officer for Asia-Pacific at DWS, an asset manager, said pick-up in consumption and a revival in services will drive China’s economic growth this year, which may accelerate to about 5% and underpin further price gains of Chinese equities.

With hopes of a consumption-driven economic recovery on the rise, foreign capital inflows into onshore consumption stocks have sped up.

Chacha Food Co Ltd, for instance, has seen its foreign ownership reach the ceiling of 28% in early January as foreign investors snapped up shares of the Shenzhen-listed food producer.

After three years of Covid-related disruptions, there is “strong pent-up demand for consumption”, Taylor said.

“Households had saved significantly more during this period and were now waiting to be able to consume more again.”

Data from the People’s Bank of China, the country’s central bank, showed that yuan-denominated savings owned by households have risen by 17.84 trillion yuan last year, far more than the rise of 9.9 trillion yuan in 2021, igniting discussions that excess savings may translate into more spending.

 - China Daily