New Year, New Trends: Tourism, Housing, and Manufacturing

By China Briefing

China tourism revenue surges during Chinese New Year

A total of RMB 423.3 billion was spent on tourism during this year’s Chinese New Year holiday period, a 15.9 percent increase from last year according to the National Tourism Administration. As part of a seven percent increase in outbound tourism, about 6.15 million Chinese nationals took overseas trips.

The travel website Ctrip recorded expenditures exceeding RMB 100 billion on outbound tourism. Tuniu, an online travel agency reported a similar boom, generating around 48 percent of its holiday business from outbound tourism.This trend is fueled by residents from rural cities looking to holiday abroad.

China’s property market slowdown in 2017

China’s real estate market is expected slow this year in reaction to  tighter regulations The property market flourished  in 2016, when the market grew 36.2 percent year over year.. Growth slowed in December as a result of the tightening of regulations in September, such as purchase limits and  mortgage restrictions, which were enacted to prevent housing prices from skyrocketing. The regulations saw success as fewer major cities recorded price increases. It is likely that low inventory levels in first- and second-tier cities will ensure price stability in the first half of 2017.

China’s steel sector’s restored growth

Statistics released from the National Development and Reform Commission have confirmed that China’s steel sector, despite poor performance in 2015, has recovered following effective capacity reduction efforts . With rising steel prices, the profits of 373 steel companies are expected to reach RMB 35 billion in 2016, compared to a combined loss of RMB 84.7 billion in 2015. China has made efforts to cut capacity since early 2016, cancelling new projects and closing mines and factories. The steel industry was one of the most affected, and made significant efforts to reduce capacity: By the end of October, 45 million tonnes of steel capacity were cut, meeting annual targets ahead of schedule. From now until 2020, it is expected that capacity will be cut by a further 100 to 150 million tonnes.

China manufacturing PMI down in January

Weakened domestic demand has slowed China’s manufacturing sector, as shown in Caixin’s General Manufacturing Purchasing Managers’ Index (PMI) released in January. The PMI stood at 51.0 last month, down from 51.9 in December. The survey, which included results from 500 factories in China, still indicates expansion (anything below 50 signifies contraction). The National Bureau of Statistics’ official manufacturing PMI read 51.3, down from 51.4 in December. However, new exports grew at their strongest pace since September 2014, following an increase in foreign demand, but new orders grew only moderately. Finished goods and purchase inventories have dropped below 50  and are experiencing reduction as Chinese manufacturers are reluctant to restock.

About the author: This article first appeared in China Briefing by Dezan Shira & Associates, a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory, and compliance, accounting, payroll, due diligence, and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email [email protected] or visit www.dezshira.com.