‘You are not safe anywhere’: tourist woes dent China’s rebound

Fiona Wang was primed for a relaxing week among palm fronds, golden sand beaches and swimming pools at the Atlantis Sanya, a tropical resort on China’s southern Hainan island.

Instead, the Beijing mother of three young children has found herself trapped at the hotel for the past two weeks, begging local authorities for a flight out of Hainan as she ran out of milk powder for a 13-month-old infant.

Wang was one of 150,000 holidaymakers who were stranded this month on the island known as “China’s Hawaii”, the latest of relentless series of localised lockdowns and mass testing campaigns imposed under President Xi Jinping’s controversial zero-Covid policy.

“We’ve got such a big family here,” she said. “We were so anxious and worried that we couldn’t go back home.”

Analysts said the Hainan lockdown highlighted the risks of travel in China, damaging confidence in the world’s biggest consumer market and fuelling doubts about Beijing’s hopes for an early rebound for the pandemic-slowed economy.

“Hainan is signalling that you are not safe anywhere,” said Alicia García-Herrero, chief Asia-Pacific economist at French bank Natixis.

“It can happen when I go to Ikea in Shanghai, when I go to Hainan, when I go to the office,” García-Herrero said, referring to chaotic scenes during a recent snap lockdown at an outlet of the home furnishing retailer in Shanghai.

Any further hit to domestic mobility and discretionary spending in China will cause headaches for economic planners in Beijing.

Xi’s administration had been relying on the services sector to help it achieve a gross domestic product growth target for 2022 of 5.5 per cent, despite mass lockdowns in Shanghai and other big cities this year that took the economy to the brink of recession.

But official statistics for July showed retail sales, an important gauge of consumption, rose only 2.7 per cent year on year, lagging a forecast 5 per cent.

Raymond Yeung, chief greater China economist at Australian bank ANZ, warned that the Hainan episode would contribute to further erosion of consumer confidence, probably dashing Beijing’s plans for pent-up demand to stimulate growth.

“Now, even if you ask people to go, they just don’t have the appetite to go anywhere . . . it’s becoming a demand-side issue,” Yeung said.

The outbreak in Hainan drove China’s national tally of Covid-19 infections to more than 3,400 on Thursday — a three-month high, but far lower than levels in many countries that have removed most pandemic restrictions.

Others take a different view.

Flora Zhu, a Beijing-based analyst with Fitch Ratings, said that while the outbreaks in Hainan might affect people’s willingness to travel long distances in the short term, she expected “sentiment to recover rapidly once the situation stabilises” and for “spending on short-haul and local trips to continue to grow”.

The Hainan lockdown also exposed rising public frustration with the government and a sense of hopelessness as the zero-Covid policies show no signs of ending.

Tianlei Huang, a research fellow at the Peterson Institute for International Economics think-tank noted that the lockdown had affected more than 1mn residents and said the zero-Covid policy was being “clumsily executed”.

In one example, Jenna Lively, an American resident of Beijing, was among many who made unsuccessful attempts to flee the island before the net closed.

Two days after arriving, she was informed that her accommodation was “changing into a quarantine hotel”, she said.

“When we began to realise the situation was getting worse, we moved our flights . . . and yet on our way to the airport, the road was blocked. We were trapped on the highway, unable to go back to the hotel and unable to go to the airport.” Her group was later sent by police to another hotel, which they have been unable to leave.

In Houhai Bay, a fishing village, one surf coach who asked to be identified as Xiaoyue, said the lockdown had come as a shock to locals who had previously seen the pandemic as a problem limited to China’s big cities.

“We were not prepared,” the 32-year-old said. “We didn’t stock up on groceries and street markets were just abruptly closed.”

While officials had arranged designated grocery buying and pick-up spots within three days, Xiaoyue remains worried that her six-year-old daughter’s start at a local primary school will be delayed.

The government dispatched Sun Chunlan, vice premier with responsibility for leading the zero-Covid campaign, to Hainan after small-scale protests broke out at hotels on the island.

Any signs of social instability will be especially worrying for Beijing in the coming months, as the ruling Chinese Communist party prepares for a congress at which Xi is expected to secure an unprecedented third term as leader.

As her desperation grew, Wang, the Beijing mother, took to social media.

In a post last week on Weibo, China’s Twitter-like platform, she pleaded for officials in Beijing to charter flights for tourists trapped in Sanya, the province’s main coastal destination.

“We can’t just complain, we need to tell the government our demands,” she said. “You can only rely on the government at the moment, as you cannot solve the problem on your own.”

Additional reporting by Emma Zhou in Beijing