China Introduces School Breaks to Stimulate Household Spending

In an effort to boost household spending, China has expanded its school break policy, allowing students in at least 27 additional cities to take time off during the fall. This initiative aims to encourage families to travel or engage in leisure activities, thereby stimulating the economy. Cities like Foshan have already reported significant increases in travel bookings, with a 50% surge in travelers during the recent autumn break compared to the previous year.

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The Chinese government has prioritized boosting household consumption as part of its economic strategy. The introduction of school breaks is seen as a low-cost method for local governments to promote spending without incurring additional expenses. Larry Hu, head of China economics at Macquarie Group Ltd, noted that this approach allows localities to stimulate consumption without direct funding from the government. The services sector, which includes tourism and entertainment, is a particular focus, as it currently accounts for only 21% of China's GDP, compared to over 40% in the United States.

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Data from Trip.com indicates a significant increase in travel-related activities during the autumn break, with hotel bookings in Zhejiang rising by 68% and flight reservations increasing by 22%. In Sichuan, hotel bookings surged by 92% year-on-year. This trend reflects a broader shift in consumer behavior, as families take advantage of the new breaks to travel, despite concerns about limited vacation time for working parents.

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Despite the positive early results, the policy has faced criticism. Some educators and parents express concerns about the limited entertainment options available for children during these breaks. Xavier Lei, a high school teacher in Chengdu, highlighted that many parents cannot take time off work to accompany their children, leading to dissatisfaction with the arrangement. Joanna Xiao, a parent in Chengdu, noted that the sudden announcement of the break made it difficult for families to adjust their plans.

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While the initial data suggests a positive impact on travel and consumption, experts caution that the overall effect on household spending may be modest. Louis Kuijs, chief Asia-Pacific economist at S&P Global Ratings, indicated that the changes could have a limited impact once the potential negative effects on other holiday spending are considered.

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As the winter school holiday approaches, which includes a newly introduced "snow break" in some regions, travel demand is expected to rise further. Data from Qunar indicates that flight bookings from regions like Urumqi have increased significantly, with families eager to travel before the peak Chinese New Year holiday. This trend underscores the ongoing efforts by the Chinese government to stimulate domestic tourism and consumption through policy adjustments.

Winter school holidays fuel surge in domestic, outbound travel

• “We were indeed a bit flustered when we had to handle the policy of autumn breaks for the first time,” — Zheng Zihua, Travel Agency Staff

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• “Parents don’t have days off so they can’t travel out themselves,” — Xavier Lei, High School Teacher

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• “For a family with both working parents, it’s impossible to get some time out to accompany the kids,” — Joanna Xiao, IT Professional

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This new approach to school breaks represents a significant shift in China's strategy to enhance consumer spending and adapt to changing economic conditions.

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