Fresh off a holiday, new data on China’s economy gives cause for hope

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The Chinese government just released new economic data following the big May holiday week. Our correspondent reports from Shanghai about how the world’s second largest economy is faring.


China is fresh off a five-day holiday for May Day. Hundreds of millions of people hit the road. This week, the government published some preliminary statistics that paint a fairly optimistic picture of China’s economy, or at least not so pessimistic. NPR China correspondent John Ruwitch is in Shanghai. John, thanks for being with us.

JOHN RUWITCH, BYLINE: Sure thing, Scott.

SIMON: What are the numbers that came out?

RUWITCH: Well, these are statistics for the Golden Week holiday, as they call it here in China. And so it’s just a snapshot. But the headline number is that tourists made almost 300 million trips during the holiday. And the key thing is that that’s up 28% from 2019, which was the last year before the pandemic that we had sort of normal travel, normal holidays here in China. It’s a surge. Tourism has been a strong point in household consumption in recent years. There has been pent-up demand from the pandemic. And so this in a way is good but not a surprise.

SIMON: What’s it felt like there in Shanghai, where you are now?

RUWITCH: Yeah, it’s been good. I mean, obviously, Shanghai is the wealthiest city in the country, so it’s perhaps not representative, but things felt quite lively over the holiday. To gauge, I went out to a coffee festival. There were actually two. There were dueling coffee fests here in town. And here’s what one of them sounded like.


RUWITCH: I chatted with a handful of people there, including folks running booths. One of them is this guy, Douglas Yu, who was selling gelato.

DOUGLAS YU: (Non-English language spoken).

RUWITCH: He said he came in with very high expectations. People like gelato. It makes them happy. It was kind of warm. And his sales actually met those expectations, so things were good. Interestingly, I’ve been traveling around the country the past year or so. This kind of food festival has really been booming lately, and it’s not just a big-city thing. Mike Wester runs a company in Beijing that does a lot of them. He’s putting on a sausage festival in a couple of weeks. He says local governments used to be very wary of these things, but now they’re very supportive.

MIKE WESTER: In an effort to stimulate the consumer economy, a lot of cities are realizing having a weekend food festival or a weeklong festival or something is actually a really good thing for the economy.

RUWITCH: And that really shows that the government is aware of the need to stimulate consumption.

SIMON: Do gatherings like that improve the economic status?

RUWITCH: Well, that’s the rub. I mean, the economy, of course, hasn’t bounced back from the end of COVID restrictions here as expected. The government’s been talking a good game about getting consumption to rise. You know, events like this one, these coffee festivals, are no doubt a lifeline to some restaurants and small businesses that have been struggling over the past couple of years, but they’re small, you know? I mean, the number of travelers, for instance, was up sharply. Revenue over this holiday season didn’t grow as fast, according to the government. So people were out and about, but they just weren’t spending a ton of money.

We saw that same thing in October at the last Golden Week. Ernan Cui is an analyst with Gavekal Dragonomics in Beijing. She says that’s linked to other more fundamental concerns in the economy. In particular, the labor market remains weak, and wage growth is not back up to the pre-COVID trend line.

ERNAN CUI: The other pretty good evidence is the consumer surveys showing that consumer confidence are still remaining low.

RUWITCH: Just people aren’t feeling comfortable with where the economy is, and there are big challenges, right? Unemployment among youth is one. There’s still a big real estate downturn that’s being worked through. There’s deflationary pressure, and the government has been pretty cautious about stimulus measures.

SIMON: Sounds like there’s a lot of work to do.

RUWITCH: Yeah, there is. And there’s a lot of pessimism. I talked with Nicholas Lardy about this though. He’s a longtime China watcher at the Peterson Institute for International Economics there in Washington. He’s a lot less pessimistic, and he recently wrote about it in the Journal of Foreign Affairs. He points out that consumption growth has actually been pretty decent for China. It grew about 9% last year. It was a little over 8% in the first quarter this year. Of course, a lot of that came from pent-up demand from the lockdown period during the pandemic. Here’s Lardy.

NICHOLAS LARDY: The question we really want to know is how much of this can be sustained on an ongoing basis once this revenge spending has fed through the system.

RUWITCH: You know, time will tell. The government certainly wants consumption to become a bigger driver of the economy, thus things like these coffee festivals and many other measures that they’ve taken.

SIMON: And, John, do the disagreements between China and the U.S., China and Europe have an effect on China’s economy?

RUWITCH: Those issues certainly loom. On Thursday, China published trade data for April. Imports and exports both grew. That’s after they fell in March. But obviously, there’s significant friction between the U.S. and China, between the EU and China over trade. And economists and other observers don’t see quick fixes, so there may well be a pretty clear impact of this going forward.

SIMON: NPR’s John Ruwitch in Shanghai. John, thanks so much for being with us.

RUWITCH: You’re welcome.


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