China's economy has been sluggish for several years, leading to a wave of brick-and-mortar store closures in many cities. People now realize that the pandemic was only the beginning of difficult times. (Video screenshot)
[People News] The 2026 National Day holiday Golden Week has concluded, and the official Ministry of Culture and Tourism of the Communist Party of China is quick to boast about the results, claiming that there were 826 million domestic trips and total spending reached 738.375 billion yuan, reflecting a year-on-year increase of 6.3% and 4.3% respectively on a comparable basis.
However, Reuters has calculated the per capita consumption based on official data, revealing a stark reality. The average spending per person during Golden Week was only 893.92 yuan, down 1.9% from 911.04 yuan in the same period last year, marking a four-year low since 2022. In 2022, during strict pandemic controls, the average was only 680.60 yuan per person. Now, without the pandemic, per capita spending has fallen back to near the lowest levels. Can this be termed a recovery in consumption? It appears to be more of a return to the previous low.
The film market is even more troubling. According to data from Maoyan, the total box office for the seven-day holiday was 1.165 billion yuan, a dramatic decline of about 36.6% compared to last year's eight-day holiday, marking the lowest figure since 2014. The hotel industry is also facing challenges; data from InnHome indicates that from October 1 to 5, the average revenue per available room decreased by 0.5% year-on-year, with the average room rate falling by approximately 2%.
In an unexpected turn of events, outbound tourism has shown remarkable strength. According to data from Ctrip, bookings for overseas hotels for stays of seven nights or more have surged by 123% compared to last year, while multi-destination trips have increased by 84%. Over half of outbound flight bookings have departure dates before October 1, with travelers averaging more than nine days abroad. A survey conducted by Longtu International reveals that 54% of respondents plan to travel overseas, a significant rise from last year's 35%. On Douyin, Chinese tourists have effectively dominated global tourist hotspots during the National Day holiday, with Chinese nationals visible in every scenic area worldwide. This raises the question: why are Chinese travelers opting to spend their money abroad? Outbound tourism serves as a legitimate form of 'voting with their feet,' signaling a strong trend of domestic consumers seeking confidence outside the country.
The Golden Week is typically the peak consumption period in China, yet per capita spending has reached a four-year low, directly challenging the official claims of a 'strong holiday economy' and 'robust service consumption.' Data from the State Administration of Taxation indicates that daily sales revenue from service consumption has risen by 19.5% year-on-year, with tourism and entertainment up by 23.6% and dining up by 9%. While these overall growth figures may seem impressive, they obscure a troubling structural decline: subsidies for replacing old appliances with new ones have artificially boosted sales in home appliances and digital products, reflecting stagnant demand driven by policy stimulus rather than genuine consumer interest; the rapid rise in snacks, fast food, and new tea beverages, alongside stable main meals, suggests that consumer behavior is shifting towards more budget-conscious and downgraded spending. Daily cross-regional movement has only seen a modest increase of 0.6% year-on-year, totaling 306 million people, with a slight uptick in foot traffic but a decline in per capita spending. The underlying logic is clear: wallets are tightening, confidence is waning, and what remains is a trend towards more economical travel.
Golden Week tourism consumption serves as a clear indicator of China's systemic economic challenges. In the second quarter of 2026, the GDP growth rate reported by the Communist Party of China was just 4.3% year-on-year, marking the lowest figure in over three years and falling outside the official annual target range of 4.5% to 5%. The outlook for the second half of the year is even bleaker, with fixed asset investment dropping by 7.2% from January to August, real estate investment plummeting nearly 20%, and retail sales growth nearly coming to a standstill. While exports, particularly of AI-related electronic products, have bolstered a significant part of the economy, domestic demand continues to deteriorate. The youth unemployment rate (ages 16-24, excluding students) surged to 18.9% in August, reaching a one-year high, as 12.7 million university graduates entered an already struggling job market. The overall urban surveyed unemployment rate increased to 5.3%. Although the employment rate for those aged 30-59 remains seemingly stable at 3.9%, the combination of high youth unemployment and layoffs among middle-aged workers suggests that structural unemployment is becoming entrenched and worsening.
The Chinese real estate crisis has now entered its sixth year, with no signs of resolution in sight. Housing prices have been declining for several consecutive years, and the wealth effect continues to erode household balance sheets. Although the first home loan interest subsidy policy appears robust, its actual scope is very limited: it applies only to homes under 120 square meters and priced at no more than 1.5 million yuan, offering an annual interest subsidy of just 1 percentage point for a duration of one year. Morgan Stanley estimates that this policy covers only about 16% of transactions and 12% of new home sales. Wang Dan, the director of China affairs at Eurasia Group, candidly remarked that the impact is limited and does not indicate long-term support. A truly effective approach would involve lifting price controls to allow the market to find its bottom, but the government is hesitant to take on the political and social risks associated with drastic fluctuations in housing prices. Consequently, the strategy has become one of 'dragging it out,' avoiding both a collapse and a clearing, while continuing to burden banks and local governments with bad debts.
Systemic financial risks are starting to surface. To stabilize the financial system, the Chinese Communist Party injected capital into eight central financial institutions in September, with the first phase of special government bonds totaling 150 billion yuan already issued, and more to come. Last year, over 70 billion dollars were injected, and another round is anticipated this year, using fiscal measures to patch up the banks, which has become a desperate measure. Nevertheless, Barclays analysts have noted that these actions 'can only provide a slight boost and cannot alter the overall situation,' and the scale is significantly smaller than the stimulus plan set for September 2024.
On October 9, the Chinese Ministry of Finance announced plans to utilize 550 billion yuan from the local government debt balance limit to strengthen financial security at the grassroots level and support localities in expanding effective investments. This marks the latest incremental fiscal policy introduced by the Communist Party to stabilize economic growth, reaching a recent high. Of this amount, 300 billion yuan in general bonds is allocated to counties and districts for basic operations, while 250 billion yuan in special bonds is directed towards infrastructure projects, including the 'six networks.' The local government debt balance limit refers to the difference between the statutory debt ceiling for local governments and their actual remaining debt. Essentially, it is the quota that the Party allows local governments to issue in bonds. Some local governments have been cautious and have not fully utilized this quota. Now, the Party is urging them to spend it quickly; after all, this is about bond issuance, and there was never a serious intention to repay the principal, only the interest at most.
A recent report by The Wall Street Journal sharply pointed out that China's economic challenges are becoming increasingly severe, with the government resorting only to temporary measures. Faced with deep-rooted issues such as the downturn in the real estate market, difficulties in employment for graduates, and challenges in corporate profitability, Xi Jinping has not taken decisive action but has instead opted for piecemeal solutions, avoiding painful patchwork policies. The reasons for this are clear: structural reforms—such as genuine deleveraging, breaking rigid payment obligations, establishing a comprehensive social security safety net, and allowing the market to clear—would entail short-term pain and political risks. In contrast, advancements in 'cutting-edge technologies' like AI and aerospace can serve to showcase strength externally while conveying an internal narrative of 'enduring pain for grand goals.' The outcome is a distorted economy: while exports and some high-tech sectors remain stable, domestic demand, real estate, and private investment have all significantly declined.
Recently, the term 'slave labor theory' has gained significant traction online. This theory asserts that regardless of how sophisticated a system may seem, if the intermediate processes rely on low wages, exploitative management, and extensive outsourcing in a 'slave labor' fashion, the final product or service will inevitably suffer from low quality due to the barrel effect. This is evident in various scenarios, such as staff at supercar racing events abandoning their posts due to low pay, and the algorithmic exploitation faced by kitchen staff and delivery riders in the food service sector. On October 8, the Ministry of Human Resources and Social Security of the Communist Party of China released a draft for public consultation regarding the protection of labor rights in new employment forms, aiming to regulate algorithms and broaden the scope of protections. However, this approach is merely a stopgap measure; the underlying issues stem from a stalling economy, insufficient overall employment, stagnant wage growth, and weak labor bargaining power. Can a simple regulation from the Ministry of Human Resources and Social Security truly reverse this downward trend?
Each round of the government's so-called 'incremental policies' is essentially a patch on a nearly broken system. Measures such as subsidized loans to encourage home buying, capital injections to stabilize banks, maintaining debt limits to support investment, and trade-in incentives for home appliances are all superficial fixes. While these actions may help the annual GDP barely meet the lower end of the target, they fail to restore confidence or reignite internal momentum.
The per capita consumption during the Golden Week has hit a new low, which is not merely a coincidental structural adjustment but rather a clear indication of the ongoing economic collapse. The Chinese Communist Party is only capable of making superficial fixes, as genuine reform would undermine the power base in Zhongnanhai. When an economy becomes increasingly dependent on external demand and internal overextension, when young people struggle to find jobs, middle-aged individuals fear unemployment, and family wealth continues to dwindle, and when the government can only employ increasingly limited policy tools to maintain superficial statistics, the so-called resilience is nothing more than a preference for a poor existence over a dignified end; it is simply about surviving one day at a time.
(Originally published by People News)△
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