China Finance: What 'Golden Week' said about the Chinese economy

China's 'Golden Week' of autumn holidays has now drawn to a close. The week of holidays surrounding the country's October 1 National Day provided some interesting indicators about the current economic situation in China. 

Firstly, tourism is up by quite a wide margin in China for the Golden Week. After jumping only 6.5% in 2010 and 9% the year after, suddenly saw a huge leap of 29% this year. So the tourism industry is certainly doing well, and we might glean a little bit of a change in spending patterns here as well, with China's citizens enjoying some travel instead of putting the cash in their savings accounts. Leisure and travel companies such as C-trip (NASDAQ: CTRP) might be seeing some growth on the back of that.

It should be noted, though, that this data was helped along by the fact that the government scrapped the tolls on many roads in the country for the holiday, causing not only a great increase in travel plans but also mass congestion on all the highways. But international travel also saw an increase, so few are disputing the general trend towards leisure spending.

Property sales is another area where the Golden Week usually sees some good numbers. But as we're in the midst of a rather strange real estate situation, with talk of a huge bubble despite the government efforts to suppress demand and slower price increases, perhaps we shouldn't be surprised that the property sales numbers are largely mixed. Big cities like Shenzhen are reportedly seeing little interest in the sector, whilst smaller locales (3rd and 4th tier cities mainly) are seeing some good numbers. So look for Chinese real estate companies focusing on these areas, as they may be able to buck the downward trend many are expecting to come.

When it comes to Golden Week shopping, the 21st century business herald has a decent article on Tax-free shopping in Hainan, a popular domestic tourist destination that would have seen a lot of the travel action we discussed earlier. The article reports that sales of goods under 5000RMB have increased 90% during the period, mainly brand name clothing, perfumes etc. This is decent news for the luxuries industry who are banking heavily on continued strong demand from China.

However, there have also been reports about decreased luxury demand in Hong Kong, which will worry the industry as it's a traditional shopping destination among the wealthy mainlanders. With sales falling at least 10% it will be noticeable for the industry and the city itself, but we'll have to wait for some aggregate numbers for greater China before we draw any real conclusions about future growth prospects.

All in all the early indicators from Golden Week are a bit of a mixed bag, but it's interesting to see the large surge in travel. If we get a few more indicators pointing that way we could well see a new strong growth sector in the Chinese economy. The mixed batch for luxuries is also an interesting point, it has long been suspected that any real crackdown against corruption and the flaunting of wealth amongst the second generation rich in China could hit the luxuries sector, as well as the luxury Baijiu (Chinese alcohol) companies.

 ----------

I write regularly about Chinese equities, mainly those listed on foreign exchanges. If you'd like to comment on this story or be notified by email whenever a new China Finance story is published, become a member - it's free, and you can use your Twitter, Facebook, Google or LinkedIn login - and "follow" the China Finance blog during the signup process. You can also bookmark the China Finance blog page.