China Sees 18% Surge in Domestic Trips in First Three Quarters of 2024

China's domestic tourism recovered strongly in the first three quarters of 2024, with nearly 5 billion trips recorded, an 18% YoY increase. Total spending reached 4.85 trillion yuan ($684 bln), up 11.5%. Urban residents made the majority of trips, while rural residents saw a 25% increase in trips and a 24% rise in spending.

China's consumer subsidy scheme, valued at 300 billion yuan ($42 billion) and set to expire at the end of 2025, has been a significant driver of economic growth. However, the scheme's diminishing impact and the potential for a "payback effect" in the coming months are raising concerns among economists and policymakers China's consumer subsidy scheme needs a rethink^[1].

The subsidies, which support purchases of appliances, electronics, and electric vehicles, have contributed to a notable increase in sales. For instance, refrigerator sales surged by 48.3% in the first nine months of 2025 compared to the same period in 2024 China's consumer subsidy scheme needs a rethink^[1]. Similarly, electric vehicle sales rose by 34.9% and audio-visual gadgets by 26.8% China's consumer subsidy scheme needs a rethink^[1]. These figures suggest that the subsidies have played a crucial role in boosting consumer spending and, consequently, GDP growth.

However, the scheme's effectiveness may be waning. Analysts predict that home appliance sales could drop by around 20% in the fourth quarter of 2025 compared to the previous year, while auto sales could decline by 2.0% China's consumer subsidy scheme needs a rethink^[1]. This front-loaded buying and base effect from a smaller subsidy scheme at the end of 2024 are likely to cause a slowdown in consumption post-subsidy.

Moreover, the scheme's focus on durable goods purchases may not be sustainable. Economists argue that such policies do not increase residents' income, encouraging only one-time price reductions rather than long-term consumption growth China's consumer subsidy scheme needs a rethink^[1]. This highlights the need for more structural reforms that address the root causes of China's consumption weakness.

To mitigate the potential slowdown in consumer spending, some experts suggest shifting the focus to service sector subsidies. By issuing vouchers for dining out, traveling, or other services, policymakers could reduce the tendency for consumers to frontload purchases China's consumer subsidy scheme needs a rethink^[1]. This approach could also create jobs and generate spillover effects, contributing to a more balanced economy.

However, addressing China's consumption challenge will require more than just subsidy adjustments. Structural measures, such as social welfare reform, are essential to lift consumption to a more sustainable level. Increasing the social welfare accounts of farmers and rural migrant workers could significantly boost consumption, lifting it to 45% of GDP within five years China's consumer subsidy scheme needs a rethink^[1].

In conclusion, while China's consumer subsidy scheme has been effective in the short term, the need for a rethink is becoming apparent. Policymakers must consider more sustainable measures to address the country's consumption weakness and ensure long-term economic stability.