China’s consumers have cut back on purchases of everything from Apple Inc.’s iPhones to Swiss watches as the trade war with the U.S. hits the economy.

Landing just days after hundreds of local companies issued profit warnings and multinationals sounded the alarm about softening demand, the week-long Lunar New Year holiday will provide the next litmus test of the resilience of the Chinese shopper.

Starting Feb. 4, the seven-day period sees hundreds of millions of people travel within the country to see relatives, fly overseas to take vacations – and open their wallets to buy gifts. In 2018, Chinese spent 926 billion yuan ($137 billion) at restaurants and stores ringing in the Year of the Dog.

This year’s celebration is the first to take place during a trade war with the U.S., and as China’s 1.4 billion people prepare to welcome the Year of the Pig, the data don’t bode well. The trade fight has dragged on China’s stock and property markets, and gross domestic product in the final quarter of 2018 rose at the slowest pace since the global financial crisis.

Duty-Free Boom

Chinese consumers account for a third of global duty-free spending, and the economic slowdown has weighed on travel companies.

The Lunar New Year could be key to turning things around. More than 400 million Chinese tourists are likely to travel domestically during the holiday, about 4 percent more than last year, according to Citigroup. Seven million Chinese will head to overseas destinations, an 8 percent rise from last year.

With the yuan down over the past year, tourists may be heading to more affordable destinations in Asia. Duty free operators like Japan Airport Terminal Co. could benefit, according to a Bloomberg Intelligence report published Jan 22.

Counting on High Rollers

Casino operators count on the holiday to bring in tourists from China’s mainland. Last year, Macau had more than 900,000 visitors during the New Year break, about 40 percent more than the average week. Average hotel rates were about 2,000 patacas ($247), almost four times the usual price.

Weakness in China’s property and manufacturing sectors has dampened the annual outlook for the world’s largest gaming destination. Analysts expect Macau’s 2019 casino revenue to decline about 1 percent from last year, according to a Bloomberg survey. In November, they had been estimating 5 percent growth.

Tourists are still going to be flocking to Macau this holiday, according to Lawrence Ho, chief executive officer of casino operator Melco Resorts & Entertainment Ltd. The operator just launched a new stunt show and a Ferrari exhibition in its resorts.

“This Chinese New Year we will definitely see business growth,” Ho said, adding that all of the company’s hotels in Macau are fully booked for the holiday period.

–With assistance from Robert Williams and Ranjeetha Pakiam.

©2019 Bloomberg L.P.

This article was written by Daniela Wei and Bruce Einhorn from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: Travel to Macau from China is expected to be down for the 2019 Lunar New Year. In this photo taken Nov. 23, 2014, people walk across a road in front of the Venetian Macao casino resorts in Macau. Kin Cheung / Associated Press