China’s reopening offers little consolation for what the Year of the Rabbit brought so far
Moviegoers’ and vacationers´ euphoria after Covid restrictions were lifted by Beijing seems to be reason enough for investors to gain trust in the Chinese economy again.
On Thursday, the first day of trading in the Year of the Rabbit, Hong Kong’s Hang Seng Index reached its highest level in 10 months.
According to ticket provider Maoyan Entertainment, movie sales during the lunar new year holiday week surpassed last year’s to top nearly $900 million.
In the first four days of the holiday, cinema operators like IMAX´s China subsidiary were top beneficiaries of the rebound, grossing 42% more than last year´s same period.
Also, according to Government data, 35 million passenger trips were recorded on Wednesday alone, 73% higher than a year earlier.
Despite this positive data, officials now say hospitalization rates for Covid peaked on January 5th, after restrictions were abruptly dropped in December.
After three years of harsh Covid lockdowns, uncertainty about future income and a resistant risk aversion have quieted consumer demand, easing central bankers´ fears of more global inflation to be fueled.
Median disposable income growth for Chinese urbanites has dropped to just 2% last year from 7% in 2021. At the same time, the wealthy, while having been largely unscathed, they are mulling emigration.
Retail sales remain depressed, falling to a 1.8% contraction in December, and average growth rates have fallen back after a robust recovery in 2021, according to Reuters.
Travel is still 40% down from 2019 levels, while passenger car sales dropped 21% from the same festive period last year, according to Nomura analysts.
Luxury shopping in Hong Kong doesn’t look good either, for some mainland visitors there complained luxury good prices aren’t competitive against domestic duty-free shopping in Hainan province.
These economic figures show that there are still no sufficient signs of a dramatic consumption recovery in China, while real estate keeps dropping.