MNI China Press Digest May 4: GDP Growth, Tourism, Support

Highlights from Chinese press reports on Thursday:

• China’s expected strong Q2 economic growth will stabilise the yuan's exchange rate, according to analysts interviewed by Yicai.com. CNY/USD had become overvalued during January, when it strengthened from CNY7.3 to CNY6.7, and the subsequent correction to CNY6.9 was closer to equilibrium, one analyst said. Traders expect Q2 GDP to grow by 7%, due to low base effects from last year, which will stabilise the exchange rate further against a backdrop of U.S. rate hikes. Although CNY depreciated recently, a further fall remains unlikely. One analyst said the service industry will continue to support the economy in Q2, as evidenced by the ongoing tourism boom during the Labor Day holiday.(Source: Yicai).
• The tourism sector recovered strongly over the May holidays, according to the Ministry of Culture and Tourism. Domestic trips increased 70.83% y/y – 19% higher than 2019. Revenue was up 128.9% y/y and was about equal to 2019 levels. Beijing and Chongqing continue to be popular, but new niche destinations such as Changxing and Xianju gained attraction. Passenger flows on several famous areas such as West Nanjing Road in Shanghai and Xi'an City Wall Scenic Area exceeded one million visitors during the holiday. Authorities have made efforts to boost consumption over the break, with Jiangsu issuing CNY170 million of consumer vouchers. (Source: 21st Century Herald)
• Authorities should ease market inflationary concerns by boosting longer-term market fundamentals and refrain from monetary stimulus, according to Yicai. The news outlet said China’s recovery had just begun and investment, and consumption had not been fully realised. The government must enhance social welfare to unleash consumption, including increasing unemployment and medical coverage for recently graduated college students. Private business confidence also needs support, with tax relief and wage subsidies given to weaker areas of the economy. External trade will inevitably slow down this year, and comprehensive measures must be taken to minimise the risk to the sector.