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China’s domestic tourism is on track to bounce back from pandemic lows, says Fitch Ratings

  • China's domestic tourism — a key indicator of retail spending — is on track to make a comeback after dipping to an all-time low during the nation's worst lockdowns, according to official data and analysts. 
  • But since the mainland's biggest lockdown in Shanghai ended in late May, the increase in holiday bookings has indicated that tourism spending would be recovering in the second half of the year, Fitch Ratings said. 
  • Signs of recovery have appeared across Chinese retail spending which rose 2.7% year-on-year in July following an unexpected 3.1% rise in June although July's number missed expectations.

China's domestic tourism — a key indicator of retail spending — is on track to make a comeback after dipping to an all-time low during the nation's worst lockdowns, according to official data and analysts. 

Since the mainland's biggest lockdown in Shanghai ended in late May, the increase in holiday bookings has indicated that tourism spending would be recovering in the second half of the year, Fitch Ratings said. 

This buoyancy comes after tourism revenue and numbers in China hit a trough in the first half of 2022 and fell by nearly half compared to the same period in 2019 before the pandemic struck, Fitch added.

"China's relaxed Covid-19 pandemic-related travel restrictions and more targeted pandemic control measures have fueled a rise in tourism demand, despite ongoing scattered outbreaks," China-based Fitch Ratings analysts Flora Zhu and Jenny Huang said in a note late last week.

"A slow recovery in the tourism sector has put a drag on the economy given its large contribution, accounting for around 11% of GDP and 10% of national employment in 2019."

Tourists walk under the full bloomed cherry blossom trees at Jimingsi Road on March 22, 2016 in Nanjing, Jiangsu Province of China.VCG

After a series of relaxations by Beijing — including the easing of inter-provincial group travel bans and the curb of excessive local government mobility controls in June — traveler numbers leapt by over 62% month-on-month in July, Fitch Ratings said, citing official Chinese data. 

Data from online travel agencies such as Tuniu Corporation showed bookings surging 112% over July, Fitch said. 

The daily average tourists at Xinjiang's top-rated, or "5A-level," tourist attractions skyrocketed to 110,000 in July compared with 19,000 in May, the Fitch analysts said. Yunnan's Dali city, a famous tourist spot, attracted 6.9 million tourists — a 46% jump from pre-pandemic levels in 2019, they said.

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