CHINESE NEW YEAR – How the national holiday affects the localized global economy

Lunar New Year, or Chinese New Year, is celebrated during the new moon, which falls between late January and early February. In 2025, the celebration begins on January 28. For hundreds of millions of people in China and other Asian countries, it is the most important holiday of the year. During these days, families get together, give gifts, have traditional dinners and spend heavily on jewelry, travel and merchandise. In today’s Strifor review, let’s look at this holiday from an economic perspective, because it is a period when there is a significant increase in consumer spending. But the holiday doesn’t just affect China’s domestic market: its effects are felt in the global economy and international financial markets.

Impact on China’s domestic economy

Consumer spending

Preparations for the holidays are accompanied by mass purchases: gifts, clothes, food and other goods. Many companies, especially in the retail industry, record a sharp increase in sales during this period. For example, major online platforms such as Alibaba and JD.com record record sales revenues before the holiday every year. You can keep this information in mind when analyzing and making CFD trades on company stocks with broker Strifor.

The service sector is also booming. Restaurants, travel agencies, and transportation companies are making significant profits. Even small traditional shops selling fireworks or red money envelopes (symbols of good luck) become the center of economic activity.

Seasonal migration and transportation costs

The Lunar New Year marks the world’s largest human migration, with hundreds of millions of Chinese returning home to spend time with family. This generates significant transportation costs and increases revenues for companies providing airline tickets, train tickets and bus tickets.

Suspension of production

On the other hand, celebrations are often accompanied by a temporary shutdown of factories and businesses. As millions of workers go on vacation, China’s industrial production declines. This can cause delays in the delivery of goods, which is especially sensitive for foreign companies dependent on Chinese suppliers.

Electricity generation falls

China’s electricity demand drops during the holiday, paradoxically against the backdrop of high consumption in other areas.

Impact on the global economy

Export growth and seasonal fluctuations

In the run-up to the Lunar New Year, Chinese companies try to finalize as many orders as possible to compensate for future production stoppages. This causes a short-term spike in exports, which affects global logistics and commodity prices.

However, after the holidays, the global economy often faces a temporary pause in shipments. For example, electronics, clothing and toys imported from China may arrive late, creating temporary shortages in international markets.

Fluctuations in commodity markets

China is the largest consumer of raw materials such as oil, metals and food. In the run-up to the holiday, companies stockpile inventories, which drives up commodity prices. But during the celebration, activity declines, sometimes causing a short-term drop in demand and prices.

Tourism as a global influencer

Before the COVID-19 pandemic, millions of Chinese tourists traveled abroad during the Lunar New Year, boosting the economies of countries such as Thailand, Japan, South Korea, European nations and other tourist destinations. Chinese travelers actively spent money on shopping, hotels, and entertainment, making them key players in the global tourism market.

How do financial markets react?

Volatility in stock markets

Before the Lunar New Year, Chinese investors often lock in profits to free up funds for holiday spending. This can lead to short-term fluctuations in stock markets.

Impact on currencies

The Chinese yuan often weakens before the holiday as demand for foreign currencies increases. Companies and citizens buy U.S. dollars or other currencies to make transactions and pay for expenses.

Increased attention to Chinese indices

Global investors are closely watching the performance of Chinese stock indexes to gauge economic activity and consumer sentiment. A successful holiday season may signal economic recovery or, on the contrary, reveal existing problems.

To summarize

The Lunar New Year is not just a cultural event, but also an economic phenomenon. Its impact is felt far beyond China, affecting financial markets, commodity prices and international trade. For investors and companies, this is a time that requires increased focus on the Chinese market and adapting to changes in economic activity.

This holiday illustrates how culture and economics are intertwined, creating unique opportunities and challenges in a globalized world. Tracking news and charts during this period can help your analysis of both directly Chinese assets and indirectly global assets. And with Strifor broker, you can trade CFDs on financial market instruments on competitive terms. Join Strifor, we always pay🤝

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