The news: Travel spending by Chinese consumers was tepid during this year’s Dragon Boat Festival, an indication that sentiment remains challenged as the US-China trade war rumbles on.

The data: Both total spending and the number of trips taken increased during the three-day holiday, according to official data.

• Chinese consumers took 119 million domestic trips during the festival, up 5.7% YoY.
• Total spending rose 5.9% YoY to RMB 42.7 billion ($5.96 billion).

But a closer look at the numbers tells a more nuanced story. Spending per trip fell 2.2% YoY, according to Bloomberg calculations, showing that the deflationary pressures that are weighing on retail sales are also present across other areas of discretionary spending.

• Travelers spent RMB 359 ($50.10) on average, which was notably lower than average per-trip spending of RMB 457 ($63.78) during April’s Tomb-Sweeping Festival.
• Chinese consumers are showing a similar reluctance to spend—or even travel—abroad, LVMH deputy CEO Stephane Bianchi told French lawmakers, a major problem for luxury brands heavily reliant on the cohort.

Our take: While the temporary tariff reprieve gives China’s economy some breathing room, consumers are rightly wary of the impact from a prolonged trade war. That could complicate Beijing’s plans to boost consumption and force retailers to continue the punishing price war that is eroding their margins.

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