This week, Chinese travelers are returning home from their “National Day Golden Week” vacations. The roughly week-long period, associated with China’s national day on Oct. 1, is an important signal for Chinese consumer confidence, as millions of people travel domestically and overseas.
And yet this year’s Golden Week—the first since China relaxed its strict COVID-19 controls last year—is proving to be a mild disappointment. Travel came in below official forecasts, showing that Chinese consumers aren’t ready to fully start spending again amid a stumbling economy.
Data released by China’s culture and tourism ministry on Monday reported 826 million trips with a revenue of about $103 billion for the eight-day holiday period starting Sept. 29. The ministry said the figures represent a 4.1% increase in the number of trips and a 1.5% increase in tourism revenue compared to 2019.
The return in Golden Week consumption gives some “positive signals on some aspects like tourism spending, consumption, and retail sales,” suggesting a “steady recovery of domestic consumption for this year,” Hunter Chan, a greater China economist at Standard Chartered, says.
Still, officials had hoped to see a larger recovery this year. Before the holiday began, officials forecast just under 900 million trips generating revenue of about $107 billion.
In 2019, the last Golden Week before the COVID pandemic disrupted travel, Chinese travelers made 782 million domestic tourism trips, according to China’s tourism ministry.
International travel is also recovering but is still below pre-pandemic levels. Outbound travel was at 85% of 2019 levels, according to data from China’s National Immigration Administration. Travel to popular long-haul destinations like Switzerland, the UK, and France experienced the fastest growth compared to the earlier Labor Day holiday in May, according to data released by travel booking firm Trip.com.
A visa backlog and a lack of international flights are constraining the recovery in international travel, Boon Sian Chai, vice president of international markets for Trip.com Group, says. Flights to and from China are still not at pre-pandemic levels, while foreign countries have been slow to approve a flood of new visa applications from interested Chinese tourists.
While state media celebrated the “Golden Week” numbers, Chan is only cautiously optimistic about China’s economy, noting weak consumption data in other areas, like box office revenue.
“Overall confidence still relies on the housing sector and the labor market,” he says. “We remain relatively cautious that recovery relies on restoration in confidence in those two sectors.”
China’s property sector, which contributes about a third of China’s GDP, is struggling with a major confidence crisis. A default in 2021 by China Evergrande Group, one of the country’s largest private developers, sparked contagion across the whole sector. Recent debt troubles with another huge developer, Country Garden, has revived concerns about the sector’s stability.
The country’s economy is also suffering from a youth unemployment crisis. Over 20% of those aged between 16 and 24 were out of work in June. (In August, China’s statistics bureau said it would temporarily pause the measurement of youth joblessness).
Together, these issues are contributing to a crisis of confidence that’s blocking China’s post-COVID recovery. “The scarring effect of the past three years of COVID disruptions and the downturn of the property sector have had a terrible effect on the balance sheets of Chinese households,” Alfredo Montufar-Helu, program director for the Conference Board’s China Center for Economics and Business, previously told Fortune.
China will report its latest monthly consumer price index on Friday. And next month, economists will see another big signal for Chinese consumption: “Singles Day,” the world’s largest online shopping festival, starts Nov. 11.