China’s services sector is recovering after removal of COVID restrictions
2023.01.08 04:37
China’s services sector is recovering after removal of COVID restrictions
Budrigannews.com – There are early indications that Chinese consumers are preparing to go out and spend again, particularly in major cities and tourist hotspots, after enduring some of the most severe COVID-19 curbs in the world for three years.
Businesses and consumers saw their first signs of life after the pandemic during the three-day New Year’s Day holiday. Vacationers flocked to beaches, flight numbers increased, and hotels turned away some guests because they were fully booked.
Businesses are now hoping that the busy long weekend was a sign that a rebound is on the cards, despite the fact that a full recovery will take some time, despite the fact that the Caixin/S&P Global services purchasing managers’ index (PMI) showed that the services sector continued to struggle in December.
Cinemas are anticipating their busiest day of the year ahead of the Lunar New Year festival in late January, and the catering industry should be able to match 2019’s revenue.
According to Haiqing Lu, chief corporate affairs and strategic relations officer at InterContinental Hotels Group Greater China, “I think the most difficult time for China’s tourism industry is behind us, and what didn’t kill us will only make us stronger.”
“We firmly believe that “once the gate is open, the trend is irreversible,” despite the fact that it is difficult to quantify the recovery in the coming months at this point.”
However, some economists are cautiously optimistic.
Bruce Pang, chief economist at Jones Lang Lasalle (NYSE:), stated, “If there are no new COVID strains, based on the experience of other countries, confidence will increase in the coming months after the fading of fear amid the exit wave, as will consumer’s willingness to spend.”
He went on to say that any such recovery would initially be focused on the country’s first-tier cities. He pointed out that if tourists brought the virus back to rural areas during the upcoming vacation, the rise in infections would hurt consumption in third- and fourth-tier cities.
China’s chief epidemiologist Wu Zunyou stated at a Beijing news briefing on December 29 that infections in the most populous cities, such as Beijing, Tianjin, and Chengdu, have peaked, despite the sharp rise in COVID cases since the government lifted most of its pandemic controls in December.
Reuters calculations based on data from aviation information provider VariFlight show that on December 30, Chinese airlines operated 8,126 passenger flights in mainland China, a 190% increase from the previous month. However, relative to levels prior to the pandemic, flight numbers on the final working day before the holiday only recovered 70 percent.
The COVID lockdowns that compelled many to intermittently shut down are now supposed to be a thing of the past, and as customers return to the big screen, China’s movie theaters also appear to stand to gain.
According to China’s movie ticketing platform Maoyan Entertainment, the first day of the Lunar New Year has been the busiest single day at the box office for four of the past six years, including 2021 and 2022.
Over the course of the pandemic, a lot of businesses have been forced to change how they reach customers.
According to calculations made by Reuters based on official data, the catering industry as a whole recovered nearly 95% of the revenues seen in the same period in 2019 thanks to online orders during the first 11 months of 2022. This was the case despite the fact that contact-intensive dining services were severely affected by stringent lockdowns.
In a 2023 China outlook report, Citi analysts predicted that retail sales would rise by around 11% this year and that “consumer spending, especially on services, will likely see a nonlinear snapback when the pent-up demand is released.”
Officials in China also anticipate a significant increase in activity as the Lunar New Year approaches.
The vice minister for transportation, Xu Chengguang, made the announcement on Friday that approximately 2 billion trips are anticipated to be made between January 7 and February 15. This is an increase of 99.5% when compared to the same time last year, but only a recovery of 70.3% when compared to 2019.
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