For many, this year’s February marked a festive ramp-up towards the seventeenth: Lunar New Year and the commencement of the Year of the Horse. Across East and Southeast Asia, streets are awash in crimson and gold, night markets brim with the scent of sizzling delicacies, and laughter accompanies the exchange of red envelopes. As the seventh of the twelfth Chinese zodiac animal, the Horse represents freedom and breakthrough (Fargo, 2026). Accordingly, the Year of the horse emphasises a stage of life where people make bolder decisions, being in motion rather than standing still.
Beyond its cultural symbolism, Lunar New Year carries substantial economic significance. As one of the largest annual human migrations and consumptions surges globally, the festival reshapes patterns of trade, tourism, labour mobility and consumer spending. In this article, I will explore the ripple effects of Lunar New Year across the Chinese and international economy.
[Elly studies Economics and Psychology, and is a Publications Director at ESSA. She is interested in exploring how ideas from economics, behavioural science and political theory can inform one another in meaningful ways. With her interdisciplinary academic background, she aims to explore the intersection of everyday life and abstract ideas.]
Travel Rush
The direct translation of the term ‘chunyun’ is spring transportation, and it refers to travel rush across China as people return to hometowns or reunite with loved ones during Lunar New Year celebrations. This period is also closely watched as an indicator of consumer confidence and economic activity. In 2026, 9.5 billion domestic trips were expected to span across February 2nd and March 13th, higher than the 9.02 billion figure from the previous year and making it the world’s largest annual human migration (Chakraborty, 2026).
This annual surge in mobility drives exceptionally high capacity utilisation across major modes of transportation such as rail networks, highways and airlines. Specifically for the latter, the airline sector is scheduled to handle an average of 19,400 flights per day, marking a 5 percent increase year on year (Wang, 2026). Consequently, the transportation sector experiences a pronounced seasonal boom. Exponential passenger volumes translate into higher ticket revenues, increased freight movement, among stronger ancillary spending in airport retail, fuel supply, catering and logistics services. To manage demand, staff may remain on duty throughout the holiday, reflecting the labour-intensive nature of the surge.
Surge in Transport
Beyond domestic transport, Lunar New Year also generates a substantial surge in regional and international tourism. In 2024, for example, China recorded over 474 million domestic tourist trips during the eight-day Spring Festival holiday alone, generating approximately RMB 632 billion (around AUD 130 billion) in tourism revenue (Xinhua, 2024). Internationally, outbound Chinese tourism also rebounded strongly post-pandemic, with neighbouring destinations such as Thailand, Japan, Singapore and South Korea reporting significant spikes in arrivals during the festive window (Jacob, 2024). These sharp increases in domestic and international travel significantly stimulate short-term economic activity: consumer spending sectors such as on accommodation, food services, entertainment, retail and transportation rises substantially during the holiday period. Further, the RMB 632 billion generated in tourism revenue reflects strong levels of household consumption, thereby supporting businesses and employment.
Cash Transactions
It is tradition to give out red envelopes to people such as children, younger unmarried relatives, employees and service staff to symbolise prosperity. Due to this, there is often a large increase in cash withdrawals and transfers through red envelopes during Lunar New Year. To accommodate the seasonal surge in demand for physical cash, the People’s Bank of China injected approximately RMB 958.4 billion (around AUD 196 billion) of liquidity into the financial system (Bloomberg, 2025). In recent years, the practice has increasingly shifted to digital platforms, and in 2017, over 32.1 billion digital red envelopes were sent and received on WeChat alone, with around 516 million users participating in the exchange of monetary gifts (Xinhua, 2017).
Closure Periods
Another economic implication of Lunar New Year is the widespread closure of businesses and temporary slowdown in production. During the holiday period, many factories, offices and other small businesses across China close for several days to allow workers to return to their hometowns and celebrate with their families. For instance, China’s manufacturing in January 2025 unexpectedly fell, with workers returning to their homes ahead of the Lunar New Year holidays. Given the sheer size of the industry – between 120 million and over 212 million – the nation’s official manufacturing purchasing managers’ index dropped from 50.1 in December to 49.1 (Etonomics, 2025). These closures can temporarily disrupt supply chains and production schedules, particularly in industries that rely heavily on Chinese manufacturing. International firms often anticipate these shutdowns by increasing inventory and adjusting production timelines before the seasonal and predictable holiday period. While this reflects the cultural importance of the festival, it also leads to a short-term pause in manufacturing activity and business operations.
Final Thoughts
Lunar New Year has significant economic implications across multiple sectors of the economy. The period stimulates strong consumer spending through increased travel, tourism, retail activity and monetary exchanges such as red envelope gifting. At the same time, temporary business closures and factory shutdowns can lead to short-term slowdowns in production and disruptions to supply chains. Despite these temporary effects, the overall impact of the festival highlights the close relationship between cultural traditions and economic activity, demonstrating how large-scale cultural events can influence consumption patterns and economic interactions.
References
Bloomberg (2025) China’s PBOC Injects Short-Term Cash Amid Crunch Before Lunar New Year—Bloomberg. https://www.bloomberg.com/news/articles/2025-01-15/pboc-dials-up-short-term-liquidity-injections-amid-cash-squeeze?embedded-checkout=true
Chakraborty. (2026). What Is Chunyun? Know About China’s Great Lunar New Year Travel Rush. (2026, February 17). Travel and Leisure Asia | Southeast Asia. https://www.travelandleisureasia.com/sea/news/what-is-chunyun-know-about-chinas-great-lunar-new-year-travel-rush/
Etonomics. (2025). The Economics of Chinese New Year. https://etonomics.com/2025/03/22/the-economics-of-chinese-new-year/
Fargo, M. (2026). This Is What the Year of the Fire Horse Means for You. Vogue. https://www.vogue.com/article/year-of-the-fire-horse-2026
Jacob, C. (2024). Chinese tourists are driving Asia-Pacific’s travel boom—Flight bookings to hit pre-pandemic levels. CNBC. https://www.cnbc.com/2024/02/22/chinese-tourists-are-fueling-a-recovery-in-asia-pacifics-travel-industry-.html
Xinhua. (2026). China’s domestic tourism market surges during Spring Festival holiday. https://english.news.cn/20240218/c1e1ea9a89f14f9dbc472a07ba8e7ffd/c.html
Xinhua. (2026). WeChat sees record high of Spring Festival holiday red packets—China—Chinadaily.com.cn. https://www.chinadaily.com.cn/china/2017-02/04/content_28102240.htm
Wang. (2026). China expects record-high air travel during Spring Festival travel rush—People’s Daily Online. https://en.people.cn/n3/2026/0120/c90000-20416336.html
