Tariffs Aftermath: China Sees Slight Surge In Holiday Spending, Services Sector Loses Momentum

<p>Chinese consumers spent 180.27 billion yuan ($24.92 billion) during this year&rsquo;s May Day holiday, marking an 8 per cent increase compared to the same period in 2024.</p>
<p>Despite the uptick, overall spending remained below pre-COVID levels, highlighting lingering weakness in the broader economic recovery, reported Reuters.</p>
<p>The five-day break, one of the most important on China&rsquo;s holiday calendar, is often viewed as a key signal of household sentiment and discretionary spending strength in the world&rsquo;s second-largest economy.</p>
<p>According to China&rsquo;s Ministry of Culture and Tourism, domestic travel saw a 6.5 per cent rise, with 314 million trips recorded. Usage of Weixin Pay, one of the country&rsquo;s most widely used digital payment platforms, also climbed by over 10 per cent year-on-year, particularly in restaurant-related transactions. Still, a closer look at individual spending reveals muted enthusiasm: per capita outlay edged up by just 1.5 per cent to 574.1 yuan&mdash;still short of the 603.4 yuan average seen in 2019.</p>
<p>Meanwhile, cinema revenues declined significantly. The box office brought in 747 million yuan during the holiday, representing roughly half the takings of the same period last year.</p>
<p><strong>Also Read : <a title=”Ford Says Tariffs To Have A $1.5 Billion Impact, Halts Full Year Outlook” href=”https://news.abplive.com/business/ford-says-tariffs-to-have-a-1-5-billion-impact-halts-full-year-outlook-1770388″ target=”_blank” rel=”noopener”>Ford Says Tariffs To Have A $1.5 Billion Impact, Halts Full Year Outlook</a></strong></p>
<h3>Trade Tensions Weigh on Services Sector</h3>
<p>In contrast to the consumer activity during the holiday, April saw China’s services sector lose momentum. The Caixin/S&amp;P Global services purchasing managers’ index (PMI) fell to 50.7 from 51.9 in March&mdash;its weakest showing since September. The 50-point threshold separates expansion from contraction. This matched the official PMI figures, which also indicated a slowdown, falling to 50.1 from 50.3.</p>
<p>”While some caution is clearly warranted, we suspect that firms are overestimating how much damage U.S. tariffs will do,” said Zichun Huang, China economist at Capital Economics.</p>
<p>The survey also reported that new orders grew at their slowest pace since December 2022. Although export orders saw a modest increase, thanks in part to recovering tourism&mdash;overall demand remained tepid. Business sentiment in the services industry hit its lowest level since February 2020. Many firms flagged US tariffs as a key concern, contributing to weaker hiring and cost-cutting strategies.</p>
<p>For the second consecutive month, service providers reduced headcounts to manage expenses. This led to a buildup of unfinished work, with the corresponding sub-index moving into expansionary territory for the first time this year. In 2023, services accounted for 56.7 per cent of China&rsquo;s GDP and employed nearly 48 per cent of the workforce. However, the combination of trade pressures and economic uncertainty continues to weigh heavily on the sector&rsquo;s outlook.</p>