China is handing out billions of yuan in shopping coupons to support retailers crushed by the COVID-19 outbreak, but the subsidies are doing little to support the kind of discretionary spending needed to revive the economy.
FILE PHOTO: A woman wearing a protective mask looks at products at a home appliances retailer, following an outbreak of the coronavirus disease , in Beijing, China, March 25, 2020. REUTERS/Thomas Peter/File Photo
“Lots of coupons are spent on daily necessities,” said Zhang Qidi, visiting researcher at the Center of International Finance Studies at the Central University of Finance and Economics in Beijing. “When consumers use coupons to purchase them, they could actually save the cash they’d spend otherwise.”
To help the retail sector, local authorities, companies and e-commerce platforms in China have been handing out shopping vouchers. Winnie Du, a 28-year-old real estate agency employee, received five supermarket coupons worth 10 yuan each from Hangzhou city this month and used them on shampoo, hand cream and toothpaste.By comparison, the United States is sending checks for $1,200 to millions of Americans, while economically battered Hong Kong plans to give each resident HK$10,000 in cash.Citic Securities predicted in a report last month that 34.9 billion yuan worth of coupons would boost consumption by 62.
Li Daxiao, chief economist at Shenzhen-based Yingda Securities, said that China’s economic priority should now be to encourage spending on food and daily necessities, while spending on bigger ticket items like automobiles could be helped in a later stage.
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