According to the South China Morning Post (SCMP), local governments across China are scrambling to revive and boost sluggish consumption through the issuance of coupons after retail sales fell 5.9% year-on-year last month.
For instance, the Chinese state-owned media Xinhua Net reported that the southern metropolis of Guangzhou issued coupons worth 30 million yuan (about $4.3 million), covering catering, e-commerce, retail, and hotel businesses.
The initiative is expected to boost consumer spending growth by around 1.4 trillion yuan ($200 billion) in 2023. Many economists say the vouchers are a more effective means of encouraging people to spend money as the country reopens.
According to Mao Zhenhua, director of the Institute of Economic Research at Renmin University in Beijing, the current batch of consumption vouchers may not be ideal for a long-term consumption recovery. It depends on the residents’ income, and Mao considers these vouchers promotional.
Instead of reaching a certain amount to obtain a discount, the director suggests the central government give each resident cash vouchers worth just over $700. He said that the country needed personal income to boost its purchasing ability.
Zhao Xijun, a Professor at the School of Finance at Renmin University, doesn’t see consumers’ unwillingness to buy products. The problem lies in the government’s lack of means to boost sales.
He considered returning to everyday life the most critical step toward restoring consumption volume.
Meanwhile, other experts have different suggestions. Yao Yang姚洋, dean of the National School of Development, suggested extending the holiday. Yao said many people opposed such measures, saying they would not stimulate consumption, as Chinese residents have always wanted to restore their everyday working lives.
SCMP shared the story of Fan Xingwei, the 27-year-old Sichuan-based restaurant owner. Fan was happy to know that he could finally resume normal operations.
Fan borrowed $43,000 to open his cafe in June. He doesn’t really expect the consumption vouchers to bring much traffic. However, he hopes to get back to everyday living and hopes that the government will stop changing the pandemic policy so suddenly.
He said that people needed a stable environment.
Regarding this matter, Bloomberg has taken a survey with 23 economists. Almost half of them see the reopening from Covid Zero will begin in the second quarter of 2023, while another seven believe it will shift in the third quarter.