The news: The Chinese government is banking on post-lockdown revenge spending to drive economic growth this year, even as it faces a number of headwinds—global economic slowdowns, a depressed property market—that could slow recovery.
Reasons for optimism: Plenty of signs point to a robust recovery in spending this year as consumers revert to prepandemic purchasing behaviors and spend heavily on services.
- Consumers are sitting on a tremendous pool of savings. Deposits held by Chinese households grew by a record 17.84 trillion yuan ($2.642 trillion) in 2022, up 80% year-over-year (YoY), per the People’s Bank of China.
- Service sector activity expanded for the first time in five months in January, per Caixin’s purchasing managers’ index (PMI), while businesses reported their highest confidence levels since February 2011.
- Travel demand is booming. Domestic tourism during the Lunar New Year rose 23% YoY, reaching 89% of its 2019 level, per China’s Ministry of Culture and Tourism. Domestic tourism revenues rose 30% YoY, to 375.8 billion yuan ($55.79 billion).
- Brands and retailers ranging from Nivea owner Beiersdorf and Walmart to Ralph Lauren noted an uptick in demand and traffic from Chinese consumers, per Reuters.