China's Lunar New Year holiday travel spending exceeds pre-Covid levels

The data showed that tourists spent nearly 632.7 billion yuan ($87.95 billion) on domestic holiday trips, an increase of 47.3% year on year.

State broadcaster China Central Television said Citing the ministry, domestic flights represented a 19% increase compared to the same period in 2019 while spending increased by 7.7%.

This strong data comes at a time when Chinese policymakers are seeking to boost domestic consumption as the country faces deflationary pressures.

The Chinese mainland saw the departure of 3.6 million tourists and the arrival of 3.23 million tourists during the holidays, according to the ministry, as mutual visa-free travel with some countries accelerated the recovery of outbound and domestic travel during the holidays.

Lunar New Year is China's most important holiday and is often seen as a key barometer to gauge the country's consumer appetite.

However, the sustainability of the increase in travel remains uncertain, as tourism revenues per trip remain below the pre-pandemic level.

“Although we see some strength in the data, we urge market participants to remain cautious,” analysts at Nomura wrote in a note to clients, highlighting that the numbers reflect pent-up demand from consumers as this was the first New Year's holiday. It has not been affected by pandemic-related factors since 2019.

“When interpreting the significantly higher year-on-year growth rates, we need to take into account the very low base from last year during the peak of the Covid exit wave,” Nomura said.

Chinese stocks rose on Monday, led by the tourism sector, as they resumed trading after a week-long closure.

Market participants are also looking forward to any additional stimulus measures from Chinese policymakers that would support the economy and possibly boost spending this year.

The People's Bank of China on Sunday kept its key interest rate steady as expected, while investors reassessed when the US Federal Reserve might start easing its monetary policy this year.

A delay in interest rate cuts will likely limit the space Beijing has to navigate its own policy, as US monetary easing bodes well for the yuan.

The country is encouraging local banks and companies to accept foreign bank cards, and is considering other steps to make mobile payments more convenient for international visitors, Zhang Qingsong, deputy governor of the People's Bank of China, said earlier this month.

— CNBC's Evelyn Cheng contributed to this report