China’s economic data shows signs of life amid prevailing doom-and-gloom outlook

Apart from a divergence among different income groups, China’s consumption trend this year is polarised among sectors, as service consumption such as concerts, tourism and catering have been better than the sale of goods – which has been more suppressed by worsening income prospects, Zhang said.

Sandalwood data showed that the total booking value on two major Chinese travel platforms, Trip.com and Tongcheng Travel, hit a record high in July, thanks to the high demand during the summer holiday.

Despite the slightly weakening momentum in August, it still maintained double-digit growth: in the first half of August, bookings on Trip.com increased by 85 per cent by value, year on year, and on Tongcheng Travel they increased by 60 per cent.

In some major cities, the subway passenger volume has also been well above pre-pandemic levels in the past few months, though that of the top three metropolises of Beijing, Shanghai and Guangzhou have yet to fully recover to 2019’s level, according to data compiled by Wind, a Chinese financial data provider.

The summer box office data also reached a new historical high this year. According to movie industry data provider Dengta, the box office in China from June to August reached 20.62 billion yuan (US$2.83 billion), compared with the previous record of 17.78 billion yuan achieved in 2019.

But such high-frequency data is highly impacted by incidental factors, such as the timing of festivals, said Lu Ting, chief China economist at Nomura.

“For the box office, it is highly related to the movies that are on show, so we tend to not jump to any conclusion on the economy just based on the box office,” he said, adding that movie ticket prices are also higher than before the pandemic.

And the surge in subway ridership is also related to the growing infrastructure construction in the past years – with new metro lines appearing in Chinese cities, Lu added.

Dan Wang, chief economist at Hang Seng Bank China, said the surge in consumer spending in tourism and entertainment – which are heavily driven by a pent-up need to get out and de-stress after COVID-19 lockdowns – is unlikely to be sustainable.

“With low shares and low growth, those segments were never pillars of China’s economy, despite being highly visible,” she said. “Ultimately, those non-essential consumptions are constrained by household income, which is determined by overall economic growth.”

For China’s economy, she added: “If you are looking at any place other than housing, you are wasting your time.”

Economists from Capital Economics, measuring growth by tracking China’s industrial output, construction activity, traffic volume, property and car sales and electricity consumption, said the economy regained some ground in July, following a contraction in June.

“But the big picture is that output has levelled off recently and that the economy could tip into a downward spiral unless policy support is ramped up soon,” they said in a note in late August.

“Troubles in the property sector will weigh on confidence among homebuyers and firms for some time. And the risks to exports remain skewed to the downside. The government has responded with some policy support. But it remains too timid and slow-moving.”

High-frequency data on the property sector, such as the volume of new home sales in major cities, has remained weak and shown little improvement, despite Beijing’s relaxing measures, economists said.