Shop and restaurant sales in China during the week-long Lunar New Year festival rose at the slowest pace in four years as a government crackdown on extravagant spending by officials limited outlays on food and drink.

Retail sales at outlets monitored by the Ministry of Commerce increased 14.7 percent in the Feb. 9 to Feb. 15 period from the year-earlier break to 539 billion yuan ($86 billion), according to a statement on its website on Feb. 15. That was down from a 16.2 percent pace in 2012 and the least since a 13.8 percent gain in 2009, according to previously released figures.

The New Year holiday, comparable to the peak Christmas shopping rush in the U.S., is a period when consumers in the world’s second-biggest economy splurge on food, jewelry and gifts, and government officials are wined and dined. Sales may have been damped by a campaign started by Xi Jinping, the new head of the Communist Party, to rein in lavish spending while rising incomes are prompting more Chinese to travel overseas.

“The slower growth, manifested in the restaurant business, was partly a result of the government crackdown on corruption and the anti-waste campaign,” Leon Zhao, a Shanghai-based analyst at researcher Frost & Sullivan, said in a telephone interview. “We expect overall retail sales and consumption to rise again along with the improving economy in the second and third quarters.”

Accelerating Growth

An improving economic outlook may help boost store receipts. China’s gross domestic product rose 7.9 percent in the final three months of 2012 from the same period a year earlier, halting a seven-quarter deceleration. The World Bank forecasts economic growth will quicken to 8.4 percent this year, more than four times the pace of the U.S. The euro area will shrink 0.1 percent, the lender projects.

Steeper discounts, longer promotion periods and Valentine’s Day falling during the 2013 festival were expected to help drive purchases, especially of gold and jewelry, Candy Huang, a Hong Kong-based analyst with Barclays Plc, said before the holiday. The New Year break was in January last year.

Jewelry sales jumped 38.1 percent over the week-long break compared with a 16.4 percent increase in 2012, according to commerce ministry figures. Food sales rose 9.8 percent, down from a 16.2 percent pace the previous year. The increase in garment sales slowed to 6.3 percent from 18.7 percent, the data showed.

Restaurant Sales

Sales of “high end” electronics, including Apple Inc.’s iPad and iPhone, jumped 36 percent in shops monitored by the ministry in the eastern city of Nanjing, according to the statement.

In contrast, spending at “high-end” restaurants in the eastern province of Zhejiang dropped by more than 20 percent, the ministry said.

The data are based on sales at “major retail and restaurant outlets” monitored by the ministry, according to the statement, which didn’t specify the number of stores or whether the figures were adjusted for inflation. The cities of Beijing, Shanghai and Nanjing, and the central and eastern provinces of Shandong, Henan, Hebei, Zhejiang and Hubei were mentioned in the report.

The National Bureau of Statistics will release combined retail sales data for January and February on March 9.

A report by the official Xinhua News Agency yesterday said many hotels and restaurants saw business decline over the holiday. The five-star Liuzhou Hotel in the southern city of Liuzhou, frequently used for government receptions, saw consumption of abalone, lobster, Moutai liquor and imported wines drop “drastically,” it said, citing an employee who declined to be identified.

Flagging Spirit

Shares in Shanghai-listed Kweichow Moutai Co., the maker of the white spirit, have dropped 17 percent since Xi took power on Nov. 15. Over the same period, the benchmark Shanghai Composite Index has jumped 20 percent.

Demand for fireworks to celebrate the Year of the Snake also fizzled as residents became more aware of their impact on the environment after toxic smog engulfed northern China last month. Statistics from the Beijing government showed sales of fireworks in the city during the holiday fell 45 percent from last year to 313,000 boxes, Xinhua said.

China UnionPay, which operates the country’s bankcard network, said the value of domestic card transactions during the New Year holiday jumped 43 percent from a year ago and overseas purchases gained 33 percent. Card payments in jewelry shops surged 119 percent, boosted by Valentine’s Day, while transactions in shopping malls climbed 44 percent, the company said in a statement on its website yesterday. In contrast, payments in restaurants increased 17 percent, it said.

Overseas Tourism

Produce and meat prices were “relatively stable” during the holiday, the commerce ministry said. The price of pork gained 0.9 percent during the holiday period from the preceding week, mutton rose 1.9 percent, beef 1.3 percent and a basket of 18 vegetables rose 0.6 percent.

Tourist arrivals in 39 key cities in China, including Beijing, Shanghai, Harbin and Sanya, climbed 15 percent to 76 million during the holiday compared with last year’s break, the National Tourism Administration said on its website yesterday. Travel agencies handled more than 4 million tourists visiting overseas, a 14 percent gain on last year, with Thailand, South Korea and Hong Kong among the hottest destinations, the administration said.

In a separate statement, the agency said tourism revenue over the festival rose 15 percent from last year to 117 billion yuan.

With holidaymakers due to return to work yesterday, the Ministry of Railways estimated it handled more than 7.4 million passengers on Feb. 15 and deployed 783 temporary trains to cope with the rush. A total 224.5 million trips were made on railways during the festival, representing a daily average of 5.61 million, Xinhua reported, citing the ministry.

–Feiwen Rong, Helen Yuan. With assistance from Alexandra Ho in Shanghai. Editors: Nerys Avery, Jason Clenfield

To contact the reporters on this story: Feiwen Rong in Beijing at [email protected] Helen Yuan in Shanghai at [email protected]

To contact the editors responsible for this story: Paul Panckhurst at [email protected]; Stanley James at [email protected]


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Tags: china

Photo credit: Dancers perform to "Gangnam Style" during the temple fair in Ditan Park, also known as the Temple of Earth, in Beijing February 9, 2013. Kim Kyung-Hoon / Reuters

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