(Forbes) – It’s an eight day holiday week in China. And for a country going through the hard landing a handful of financial pundits have forecast for the world’s No. 2 economy, the locals there seem pretty upbeat. While they are spending less on the high end luxury goods the financial press seem to enjoy focusing on so much, the Chinese are spending more on the road this holiday season. It might be budget travel in an economic slowdown. But there is much more of it. That might say something about China’s middle class resilience, even in this economic downturn.

And just how bad is the economy down shifting these days?

According to Barclays Capital’s Yping Huang in Hong Kon and a host of mainland China media reports, the public mood in China this holiday season is “buoyant” — to use Huang’s words — with tourists flooding China’s vacation destinations.

Yes, the economy is slowing, with National Bureau of Statistics’ PMI still printing below 50. But consumer confidence is strong. China is slowing on purpose, and it remains a matter of debate whether most of the disappointing growth there is due to Beijing machinations or European weakness.  Europe is China’s biggest trading partner and China is still an export economy, not a local consumer economy like the U.S.

China kicked off an eight-day holiday on Sept. 30 combining both the Moon Festival and National Day. As the locals took time off,  official September PMI rose marginally to 49.8 from August’s 49.2. This could be partly driven by seasonal patterns, as the NBS PMI usually sees a m/m rise in September (1.2 percent this year vs 0.6 percent in 2011 and 4 percent in 2010, Huang wrote in a note to clients on Friday.

But the details of the NBS report showed signs of a stabilization in activity. The production index rose to 51.3, after declining to 50.9 in August from July’s 51.8, while the new orders index also edged higher, to 49.8 from 48.7 previously.

China’s underlying growth momentum remains weak in September. Barclays is forecasting 7.3 percent year over year growth in the third quarter from from 7.6 percent in the second quarter.  The official number will be be released on October 18.

Interestingly enough, the public mood seems unaffected by the slowdown. On  October 1, China’s National Day, media reported that over four million people visited the nationally monitored scenic spots, a rise of 23.7 percent from 2011′s holiday season. Media reports on TV also showed cars stranded in traffic jams across the country.

Meanwhile, mainland tourists to Hong Kong now seem less interested in luxury goods stores, as more of them are visiting places such as supermarkets and campsites, Huang pointed out in his report on Friday.

Some may say that the Chinese are simply too optimistic after decades of economic success and don’t know what’s barreling down on them: decades more of slow, lackluster growth.  The party is over, say the Jim Chanos of the world.  But a closer look by those in the Chinese market suggests a much different view, and one that officials and other China hands, both old and new, have been saying for the last two years. An increase in run of the mill consumer spending is good for China.  The country cannot survive on Hong Kong and Shanghai wealthy alone.  The future of China, like the future of the U.S., rests on its middle class.  The campsite tourism, the scenic drives, are a sign of this new economic re-balancing even as the economy goes from a double digit grower to more sustainable, less block buster growth.

 A surge in Chinese international travellers and luxury shoppers has been anticipated, given the unlikely alignment of the Chinese National Day and Mid-Autumn Lunar Festival.

Once every ten years both events occur at the same time, allowing for an extended holiday period in China.

“This is one of the longest holiday periods in China, and unlike Chinese New Year, there are no family obligations during this holiday, so most Chinese citizens will be travelling during this period – both in China and increasingly, overseas,” China Luxury Network chief executive Renee Hartmann said.

The Mid-Autumn Lunar Festival will occur on 30 September, while Chinese National Day falls on 1 October.

Luxury retailers will likely be the biggest beneficiaries of the overlapping holidays, according to Nihao America Magazine editor in chief Catherine Lin.

“Typically early October is slow time for luxury brands, but in 2012, there is likely to be a surge of shopping activity at high-end retailers and department stores,” Ms Lin said.

“For European luxury brands, nearly one third of their revenues are now coming from Chinese tourists.”

Over the past two years luxury retailers in the United States have reported increased sales to Chinese clients.

“Chinese visitors can often pay for their trip with the savings in shopping,” Ms Lin said.

The annual Golden Week holiday in China is typically marked by chaos on motorways as millions of Chinese travelers hit the holiday trail, and this year is no different. The upside? The clogged roads are hints the economy may avert a hard landing, at least for now.

This is because the traffic gridlock tells a story that official data don’t: that the Chinese consumer is still confident about the economy, spending and going on holidays, even as the headline GDP figure slows and stock prices fall.

In the first four days of the eight-day holiday, arguably the most important dates for Chinese tourism in the calendar, the number of travelers to 119 major attractions across the country totaled 18.2 million, up 23.4 percent from the same period the year before, according to the National Tourism Administration. This compares to a 6.5 percent growth in 2010, and 8.8 percent in 2011.

Sales revenue at these destinations reached 957 million yuan ($151 million), up 25 percent.

Market watchers say this backs the view that the Chinese consumer remains a bright spot in a slowing economy—GDP of the world’s second-biggest economy slowed to 7.6 percent in the second quarter, its slowest pace in three and a half years.

“Chinese tourists are in a spending mood…something is stirring out there,” Uwe Parpart, chief strategist and head of research with Reorient Financial Markets in Hong Kong said. “People don’t travel and spend when the economy is in terrible shape.”

So what’s behind the consumer optimism? According to analysts from Bank of America Merrill Lynch, a few factors are at play. For one, the employment picture, which has a direct impact on the consumer’s wallet, remains fairly robust. While wages in the first half of 2012 grew 13.1 percent from the year before, lower than the 14.4 percent figure in 2011, wage growth actually picked up due to lower inflation.

“Though we expect the unemployment rate to rise in 2H12, it is unlikely that we will see massive layoffs if the Chinese government would take some necessary measures to support growth for the rest of the year,” Ting Lu and Larry Hu, economists with Bank of America Merrill Lynch said in a report on Thursday.

Also helping sentiment is the fact that property prices have stayed almost unchanged in the past year despite numerous tightening measures, Lu and Hu said, adding that the consensus among investors are that real estate prices are about to recover.

Whilst Chinese stocks have staged an appalling performance so far this year, down about 15 percent on average, the impact is limited on Chinese investors who are largely used to high market volatility, and whose stock exposure on average is less than 20 percent of household bank deposits, they added.

“Chinese consumers are still relatively confident about China’s economic fundamentals,” Lu and Hu wrote. “Strong tourism data support our soft-landing views … and also point to a shift of consumption toward leisure, a new source of demand.”

Golden Week a Boost to Rebalancing Efforts

The Chinese government has been trying to rebalance the economy by increasing domestic consumption’s share of GDP and reducing the nation’s reliance on exports so that it would not be too vulnerable to a decline in overseas demand. During the 2009 financial crisis, Chinese exports plunged for the first time since 1983, by 16 percent over the year as demand from its biggest markets collapsed.

According to Parpart, the tourism data point to a resilient Chinese consumer and should give China’s rebalancing ambitions a boost.

“It’s a positive signal. Chinese salaries have increased by an average of over 20 percent over the past year and a half,” he said. “If some of that now goes to consumption, it is what the government likes to see to make the economy less dependent on exports.”

Indeed, to encourage people to travel and spend during the holiday, when normal economic activity is suspended and stock markets shut down, the Chinese government slashed entry-ticket prices at 94 tourist attractions nationwide by 25 percent on average.

BofA-Merrill says the upbeat travel data show China’s economy indicators run beyond the closely-watched electricity and manufacturing gauges.

“Robust Golden Week tourism data also suggest that China’s GDP data… might be more real than what’s perceived by (market) bears, who are focused too much on power usage and industrial production,” the report said.

—By CNBC’s Jean Chua.