China Lunar New Year travel spending surpasses pre-Covid levels — is consumption revival in sight?

China's travel activity and spending jumped above pre-pandemic levels during the Lunar New year holiday, in a sign that consumption was improving in the world's second-largest economy.

Some 474 million domestic trips were made during the eight-day festival, a 34.3% jump from a year earlier, according to data released by the country's Ministry of Culture and Tourism on Sunday.

Tourists spent nearly 632.7 billion yuan ($87.95 billion) on domestic holiday trips, a 47.3% year-over-year jump, data showed.

State broadcaster China Central Television said citing the ministry that domestic trips represented a 19% rise over the same period in 2019 while spending rose 7.7%.

The strong data comes at a time when policymakers in China have been scrambling to boost domestic consumption as the country faces deflationary pressures.

The Chinese mainland saw 3.6 million tourist departures and 3.23 million tourist arrivals during the holidays, according to the ministry, as mutual visa-free travel with certain countries hastened the recovery in both outbound and inbound travel during the holidays.

The Lunar New Year is China's most important holiday and is often seen as key metric for gauging consumer appetite in the country.

However, sustainability of the bump in travel remains uncertain as tourism revenue per trip still remained below the pre-pandemic level.

"Although we do see some strength in the data, we urge market participants to exercise caution," analysts at Nomura wrote in a client note, highlighting that the figures reflected pent-up demand from consumers as this was the first new year holiday that was not impacted by the pandemic-related factors since 2019.

"When interpreting the remarkably high year-over-year growth rates, we need to