'Spend lavishly for 11 days'... China bets on the golden holiday [Click China]

All-in on boosting consumption during the Labor Day golden holiday

Likely to influence Q2 economic growth rate

Interest rate cuts expected after the holiday

"I decided on Jiangxi Province in the southeast, where many event coupons can be used." On the 5th, Mr. Wu, who teaches students in Chaoyang District, Beijing, said, "The longer-than-expected holiday made it possible for a family trip." The Chinese government is using the Labor Day golden holiday, which runs from the 1st to today, as a driving force for boosting domestic demand. With the impact of the tariff war with the U.S. becoming a reality, the strategy is to mitigate the export shock by expanding consumption during the holiday period.

According to China State Railway Group, railway passenger transport volume during the Labor Day holiday showed an increase of more than 10% compared to the same period last year. On the first day of the holiday, the daily transport volume reached a record high of 23,119,000 people. It is expected that the number of passengers using domestic flights in China during this holiday will reach a record high of 10.75 million, an 8% increase compared to last year's holiday.

China extended the Labor Day holiday to stimulate consumption. The statutory holiday was extended from the existing 1 day to 1-2 days, and 5 days were included in the holiday through substitute work. Chinese state media also encouraged long vacations by saying, "If you take only 4 days off, you can rest for up to 11 days."

Local governments also competitively held events for the 'holiday economy.' Jiangxi Province, famous for ceramics, held over 100 cultural and tourism events by maximizing local tourist attractions. Hainan Province issued dining and duty-free shopping coupons worth a total of 16 million yuan (about 3.1 billion won) during the holiday. In Ningxia, 24 trade-in sales were conducted only during the holiday, with subsidies for consumer goods trade-ins reaching at least 40 million yuan. Cities such as Beijing, Shanghai, Guangzhou, and Shenzhen also issued discount coupons for tourist attractions to promote consumption.

The reason the Chinese government focused on boosting domestic demand during the Labor Day holiday is that it could be the biggest variable in economic growth in the second quarter. China was evaluated to have performed relatively well with a 5.4% growth in the first quarter compared to the same period last year. However, exports are rapidly shrinking in the second quarter due to the effects of the U.S.-China tariff war. Therefore, consumption expansion after the second quarter is necessary to achieve this year's economic growth target.

A company official in China said, "The Chinese government sees boosting consumption and economic stability as the biggest weapons to respond to the hegemony competition with the U.S."

Experts predict that after the Labor Day holiday, there will be major support measures for Chinese export companies hit by the U.S. tariff increase, along with continued consumption promotion, such as lowering the Loan Prime Rate (LPR) and the Reserve Requirement Ratio (RRR) as part of an accommodative monetary policy.

Beijing = Kim Eun-jung, Correspondent kej@hankyung.com