China’s consumption has almost completely recovered to pre-pandemic levels, as shown by surging spending on items from travel products to duty-free goods during the 2021 May Day holidays. In Haikou, capital of Hainan province, Chinese people made 65,400 purchases amounting to CNY485 million of offshore duty-free goods in the first three days of the five-day May Day holiday period, up 215.24% year-on-year. In Wuhan, the city at the heart of the initial coronavirus outbreak in China, more than 140,000 passengers trips were recorded at Wuhan Railway Station on May 1. Many hotels were booked out days or even weeks ahead of the holidays. In Shanghai, tourists paid about 4.66 million visits to 170 tourism sites, up 166% from 2020 and 6% more compared to 2019.

On average, every Chinese tourist spent about CNY1,713 on tourism and other items during this year’s May Day holiday, setting a record for the past years. During the five-day May Day holiday, CNY113.23 billion flowed into China’s tourism industry, up 138.1% year-on-year and about 77% of that of pre-epidemic levels, according to the Ministry of Culture and Tourism. A total of 230 million domestic trips were made over the five days, compared with 637 million trips during the eight-day Golden Week holiday last year which combined the October 1 National Day and the Mid-Autumn Festival. The Chinese people’s per-capita disposable income rose 4.7% to CNY32,189 in 2020.

“While the consumption sector was a burden on the Chinese economy in 2020, its contribution to the general economy will climb steadily to about 60% of GDP growth by the end of this year, while export momentum will slow down,” Tian Yun, Vice Director of the Beijing Economic Operation Association, told the Global Times. This is roughly the same as in 2019, which saw about 57.8% of the country’s GDP growth coming from consumption spending, meaning that China’s consumption market will return to normal this year. Tian predicted that China’s GDP will grow by about 8.5% this year. He noted that the booming consumption market was in part fueled by a shift from overseas to local spending as many parts of the world are still locked down due to the pandemic. Tian added that if virus strains from India spread to certain parts of China and cause regional lockdowns, the impact on the Chinese economy is “uncertain.” Apart from coronavirus threats, rising inflation in the world, particularly of bulk commodity products like oil would also pose threats to the Chinese economy, including shrinking exports and rising manufacturing costs, the Global Times reports.  

Some 230 million domestic trips were made over the five-day May Day holiday, marking a year-on-year rise of 119.7% and an increase by 103.2% compared to 2019, the year before the pandemic. Tourism-related revenue exceeded CNY113 billion, up 138.1% year-on-year, reaching 77% of the level before the pandemic.

China’s imports surged by the fastest pace in a decade last month as domestic demand increased. China’s total foreign trade grew 26.6% year-on-year to CNY3.15 trillion in April. During the January-April period, the country’s imports jumped 22.7% year-on-year to CNY5.3 trillion while exports soared 33.8% to CNY6.32 trillion, sending the trade surplus up 149.7% to CNY1.02 trillion, the China Daily reports.

In U.S. dollar terms, China’s trade volume grew 37% year-on-year to USD485 billion in April, marking the 11^th consecutive month that the country’s foreign trade achieved positive growth. Total trade volume in April surged 3.5% compared with that of March. It also gained 29.6% compared with the same period in 2019, according to data released by the General Administration of Customs. Exports jumped 32.3% year-on-year to USD263.9 billion, beating market expectations, while imports surged 43.1% year-on-year to USD221.1 billion. The trade surplus dwindled 4.7% in dollar terms to USD42.9 billion compared with the same period last year. In the first four months, China’s total trade volume expanded 38.2% year-on-year to USD1.79 trillion, with exports and imports surging 44% and 31.9%, respectively. Analysts expect that the export machine will remain robust in the second quarter as the coronavirus outbreak resumes in some export-oriented countries, such as India, the Global Times reports. 

In other trade-related news, Zhang Xiangchen, a Chinese Vice Minister of Commerce, has been appointed one of four Deputy Director Generals of the World Trade Organization (WTO). According to a report issued by the WTO, China’s share of global imports and exports reached 11.5% and 14.7% in 2020. China was the only economy in the world to achieve positive commodity trade growth last year.

China’s Embassy in Belgium has hit out at what it calls “baseless allegations” by Belgian Justice Minister Vincent Van Quickenborne that a logistics hub in Liege operated by Alibaba Group Holding could be used by Chinese spies for access to sensitive intelligence, the South China Morning Post reports. The hub at Liege Airport is one of six global logistics centers that enables the world’s largest e-commerce platform to deliver products anywhere within 72 hours. Operated by Alibaba’s Cainiao logistics unit, the Liege hub may allow access to “sensitive areas” of the air terminal to Chinese intelligence services, Minister Van Quickenborne said on May 5 before a parliamentary committee. Laws in China “force all the country’s companies to cooperate with intelligence agencies,” Van Quickenborne said, adding that Chinese agents “could have access to sensitive and secure areas of the airport or to commercial and personal data in Alibaba’s possession. Companies like Alibaba are required to open positions within the company to their agents.”

The South China Morning Post mentions that the comment, made without evidence, underscores a rising tide of concerns among some Western governments about the growing clout of China’s government and companies. Alibaba, one of China’s largest home-grown companies and the largest operator of online shopping services, is also one of the most prominent icons of that global presence. The Chinese Embassy in Belgium refuted the media reports on May 7, slamming them for making “baseless allegations.” China’s government does not “demand Chinese enterprises to engage in activities that breach local laws or regulations,” the Embassy said in a statement. “China never presents a threat to Belgium,” the Embassy added. “The cooperation between the two nations is built on the foundation of mutual respect, mutual benefits and win-win relationship.”

Alibaba’s Liege hub, which is still under construction and is scheduled to be fully operational at the end of 2021, is Alibaba’s Western European nerve center and part of its global network of logistics centers, known as the electronic World Trade Platform (eWTP). It was the staging point for the delivery last year of 2 million masks and other personal protection equipment (PPE) donated by the Jack Ma Foundation to Europe. A March 2020 donation of 800 ventilators, 300,000 sets of protective clothing and 300,000 face shields to hospitals in Europe also went through Liege. Alibaba owns South China Morning Post.

China’s environmental goals will create growth opportunities for European companies, some of which have decades of experience in the field, Joerg Wuttke, President of the European Union Chamber of Commerce in China, said. China’s development during the 14^th Five Year Plan period (2021-25) will certainly make it a larger, more sophisticated economy, with very demanding customers and focused more on qualitative, rather than quantitative growth. There will also be an added emphasis on environmental protection, he said. Wuttke’s comments come at a time when China is aiming to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. “At the same time, Europe is a continent which is high-tech and which has a lot of very efficient small and medium-sized enterprises. I hope that Chinese business finds more opportunities to buy into this,” he said, adding “we need investment on both sides in order to get the economies closer.”

Economic ties between Europe and China have been “dense and successful,” Wuttke said. China has become the biggest trade partner of the European Union, while the EU is China’s second-largest trade partner. The China-EU Comprehensive Agreement on Investment (CAI), negotiations for which were finished in December, is yet to be put into effect. Still, Wuttke hopes that steps would be taken to provide greater access for European firms in sectors such as new energy vehicles and healthcare in China. The Chamber is trying to organize a conference on sports, including a visit to Beijing 2022 Winter Olympic Games venues, later this year to show the business side and the health implications of sports, Wuttke said. 

Meanwhile, the Chamber has closely followed developments in the Guangdong-Hong Kong-Macao Greater Bay Area, where the gross domestic product is expected to reach about USD4.6 trillion in 2030, said Klaus Zenkel, Chairman of the Chamber’s South China Chapter. “I think there is potential and very good opportunities for foreign investment in this area and in new technologies. For example, Shenzhen in Guangdong province, is a melting pot of talent with big diversity. Such diversity is crying for innovation, the China Daily reports. 

Ministry of Commerce Spokesman Gao Feng said that China will keep opening up and improving its business environment, to further optimize the structure and quality of foreign investment and maintain its overall scale. He said that there would be some pressure in attracting foreign capital this year, despite the steady growth in foreign investment during the first three months of the year. During the first quarter of this year, China’s actual use of foreign investment stood at CNY302.47 billion, up 39.9% on a yearly basis. Moreover, 10,263 enterprises with foreign investment were established during the period, up 47.8% on a yearly basis, 6.7% higher than in the same period in 2019. 

According to a recent survey conducted by the Ministry, 96.4% of the more than 3,200 foreign-invested companies had a positive attitude toward future business prospects in the country, up 2.1 percentage points from the beginning of this year, according to MOFCOM Spokesman Gao. Western China registered a year-on-year growth of 91% in the actual use of foreign investment in the first quarter. The figures for East China and Central China were 38.2% and 36.8%, respectively. Gao said western China’s increasing attractiveness to foreign investors was largely due to the impact of new government policies, especially the new industry catalog, released at the end of last year, which encourages foreign investment. Under the new catalog, foreign-invested enterprises in the region that meet certain qualifications can enjoy income tax rebates, tariff exemptions on equipment imports for their own use, and preferential land supplies, said Gao.

Sixty-five items have been added to the national catalog, and 34 more items have been added as regional advantageous industries for western China, thereby expanding the alternatives for foreign investors, he said. Cui Fan, International Trade and Economics Professor at the University of International Business and Economics in Beijing, said China has demonstrated strong economic resilience during the pandemic. Its future growth potential, together  with the continuous rollout of policy measures facilitating investment and enhancing the business environment, make it an attractive destination for foreign investment, the China Daily reports. 

Huge potential exists for further cooperation between China and the European Union in fields like the digital economy and the green economy, Zhao Ping, Deputy Director of the Research Institute of the China Council for the Promotion of International Trade (CCPIT), said.