More work breaks to give economy break

Chinese policymakers could put more days off into people's hands, as the relatively scarce paid vacation days may be out of step with the needs of a consumption-driven economy that Beijing has been pursuing, analysts said.

Services consumption — including travel, dining, cultural experiences and sporting events, among others — requires not just disposable income, but disposable time, they said.

In a policy move unveiled last week, the government is now encouraging elementary and secondary schools to explore the establishment of spring and autumn breaks, linking increased student leisure time to the broader goal of boosting household spending in the services sector.

Foshan, Guangdong province, announced in August it would pilot spring and autumn breaks for compulsory education schools during the 2025-26 academic year. Under the plan, students will receive a three-day autumn break in mid-November and a two-day spring break around May Day, totaling five additional days off without reducing total teaching time.

Time off functions as key to economic stimulation, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, adding: "For services consumption, the activity is time-bound. Without adequate leisure hours, even households with sufficient disposable income cannot convert that potential into economic gains."

China rolled out a special action plan in March to boost consumption, which clearly proposes to better safeguard the rights and interests of workers to rest and take vacations.

"You cannot spend on a weekend getaway, a family dinner at a new restaurant or a museum visit if you are continuously at work. Also, services consumption requires not just money in people's pockets, but hours on their calendars," Wang said.

The increasing consumer appetite for services is becoming the main driver for expanding domestic consumption in China.

The National Bureau of Statistics said in the first eight months, the growth rate of retail services sales reached 5.1 percent year-on-year, outpacing the 4.6 percent increase observed in total retail sales of consumer goods.

Rather than relying solely on traditional stimulus measures, these initiatives acknowledge that consumption potential remains largely untapped without adequate leisure time to enjoy such services.

In China, workers are entitled to five to 15 days of paid annual leave by law, with an average of 10 days actually taken. This is lower than the 25 days in France, 20 days in Germany, as well as 12-20 days in Mexico, 10-22 days in Brazil and at least 28 days in Russia, according to a report from Yuekai Securities.

Moreover, current arrangements place nine of China's 13 public holidays in first half of the year, creating a stark front-loaded leisure drought for the subsequent six months. This lopsided distribution fuels a poor vacation experience for the public, as overcrowding and traffic congestion have become the norm during peak travel seasons, as noted in the report.

Luo Zhiheng, chief economist at Yuekai Securities, said that boosting consumers' leisure time and reducing work hours will, more or less, have some disruptions to production. However, the current problem facing the Chinese economy is not insufficient production, but rather insufficient demand, with supply exceeding demand leading to profit pressure on enterprises.

"Continuing to prioritize production and labor input only intensifies race-to-the-bottom competition, exacerbates overcapacity and worsens the supply-demand mismatch. By increasing household incomes and leisure time we can activate more consumption scenarios to digest massive production capacity," Luo said, describing this as the pathway to a "new virtuous cycle "for the Chinese economy.

Policymakers could consider adding Qixi Festival — Chinese Valentine's Day — in August and Chongyang Festival, also known as Double Ninth Festival, in October, to help address a structural imbalance in China's vacation schedule, which currently clusters most days off earlier in the year, Luo said.

The additional vacations would bring cultural resonance and economic purpose to the latter half of the calendar, Luo added.