There's a classic scene in The Matrix where Cypher bites into a juicy steak knowing it's fake, and says: "Ignorance is bliss." Yeah. That's the market right now looking at China's holiday data.
The Lunar New Year — nine days off, the biggest holiday on the Chinese calendar — wrapped up with gorgeous headlines. Record train passengers: 18.7 million in a single day. Hotel bookings with occupancy above 90% in coastal cities. Duty-free sales in Hainan up 30.8%. Hotel + theme park bundles on Fliggy (Alibaba's travel platform) more than doubling year-over-year.
Beautiful. Cinematic. You can almost hear the analysts sighing with relief.
CCB International Securities dropped a report saying the data "confirms that Beijing's recent stimulus is working." The market bought the narrative. After all, who doesn't love a nice steak on their plate, right?
But here's where things get ugly.
The Number Nobody Puts in the Headline
Average spending per tourist trip fell 0.2% year-over-year. That's right. People traveled more, spent more in aggregate — but each one of them, individually, tightened their belt.
Read that again: per capita spending deflation. During a major holiday. With an extra day off officially granted by the government specifically to stimulate consumption.
This isn't a recovery. This is a patient who left the ICU, is walking around the hospital hallway, and the doctor already wants to discharge him because he needs the bed.
Morgan Stanley — not exactly a den of pessimists — put it diplomatically: "Consumers remained cautious with budgets overall." Translation from econ-speak: Chinese people are scared to spend. Sentiment improved at the margin, but wallets are still tight.
The Elephant in the Room: Where's the Real Stimulus?
Here's the point that mainstream financial markets don't want to confront.
Unlike the U.S. — which, for all its problems, at least shoved money directly into people's pockets during the pandemic — China opted for trade-in programs and vouchers. You know, glorified discount coupons that force you to spend in order to "save." It's not a direct transfer. It's not extra income. It's consumption engineering.
Beijing talks a big game about "increasing consumer income." But details? Zero. Nothing. Empty as a politician's promise during election year — and in China they don't even have elections.
And the worst part: with these "good enough" holiday numbers, the odds of robust, direct-to-consumer stimulus just went down. CCB itself said it expects "incremental and targeted measures" at the parliamentary meetings in March.
Incremental and targeted. In bureaucratic Chinese, that means: we'll do the bare minimum so it doesn't look like we're doing nothing.
The Expectations Game
Premier Li Qiang will announce the year's economic targets on March 5th. Everyone knows it'll be something around 5% GDP growth. And everyone knows there'll be a giant asterisk next to that number.
China has become a master at creating the appearance of growth without solving the structural problem. The services sector grows, tourism rises, but retail — the real thermometer of people's wallets — has been lukewarm since the pandemic.
It's like a guy who posts vacation photos on Instagram every month but is three months behind on rent. The façade shines. The foundation shakes.
And Why Should You Care?
Because if you have exposure to China — through ETFs, commodities, or companies that export there — you need to understand that this "recovery" has short legs.
Nassim Taleb would say: beware the narrative that makes you feel comfortable. The market loves confusing noise with signal. One good holiday isn't a trend. A 0.2% drop in per capita spending during a holiday the government literally extended to boost consumption... damn, now that's a signal.
The question is simple: are you going to eat Cypher's steak knowing it's fake, or are you going to swallow the red pill and look at the real numbers?
