Extended public holidays a boost to consumer spending

China has decided to extend national public holidays by two days starting 2025. Analysts said the move may be part of the country's unfolding policy agenda to more directly boost consumption given elevated external uncertainties.

The Spring Festival holiday is extended from three days to four days, with the eve of the Chinese Lunar New Year added, the State Council said on Tuesday. The Labor Day holiday is increased from one day to two days, with May 2 added. The changes will take effect next year.

Liu Chunsheng, an associate professor at the Central University of Finance and Economics, said that the move not only responds to people's need of more leisure time but helps bolster consumer spending and stabilize the whole economy given the vitality of holiday spending seen in recent years.

It is worth mentioning that the holiday extension seems to be a more direct support for consumption following a raft of broader policy measures to correct insufficient demand.

On Friday, China allocated 10 trillion yuan in new fiscal funding to replace local government hidden debt to mitigate risks and free up local fiscal resources for economic development, following measures to ease home buying costs and channel more funds to the capital market.

UBS Investment Bank's Chief China Economist Wang Tao said that while the the measures to stabilize housing and stock markets can drive consumption via wealth effect, people are still looking for income and consumption subsidies to households and measures to support employment.