China Issues Successive 'Coupons' to Revive Sluggish Consumption

[Image source=Reuters Yonhap News]

[Asia Economy Beijing=Special Correspondent Park Sun-mi] To boost the severely contracted consumer sentiment in China due to the impact of COVID-19, local governments and companies in China are issuing 'coupons' that can be used like cash one after another.

According to the Hong Kong South China Morning Post (SCMP) on the 17th, Suning.com, China's largest home appliance retailer, has been issuing cash-equivalent coupons worth 500 million yuan (approximately 88.3 billion KRW) to customers since last weekend. These cash-equivalent coupons can be used to purchase home appliances, clothing, jewelry, and more at 200 Carrefour stores nationwide, as well as online and through mobile apps. Each person can receive a 500 yuan coupon.

Local governments in China have also started issuing coupons to revive regional economies. Nanjing City in Jiangsu Province recently issued electronic (e) coupons worth 318 million yuan through an internet lottery system to both local residents and non-residents. These coupons can be used at local restaurants, gyms, bookstores, and electronics stores. Nanjing City also created and distributed separate coupons for low-income groups and employees registered with specific labor unions.

Macau issued coupons worth 2.2 billion patacas (approximately 330 billion KRW) for local residents, and Jinan City in Shandong Province distributed tourism and cultural consumption coupons worth 20 million yuan. Ningbo City in Zhejiang Province, Hebei Province, and Liaoning Province also issued similar coupons.

This is the first time since the 2007-2008 global financial crisis, when some cities like Hangzhou and Chengdu issued coupons to stimulate consumption, that Chinese local governments have consecutively issued consumption coupons to revive the economy.

The central government of China has instructed local government officials to drive regional economic consumption. In response, senior officials from Nanjing City, Shandong Province, Hunan Province, Guangdong Province, and Hainan Province publicly dined at restaurants and shopped, making gestures that align with the government's intention to stimulate consumption.

Consumption in China has been severely contracted due to the impact of COVID-19. The National Bureau of Statistics of China announced on the 16th that retail sales in January and February decreased by 20.5% compared to the same period last year. This is the lowest level of consumer sentiment ever recorded. Since consumer spending accounts for nearly 60% of China's gross domestic product (GDP), the contraction in consumption directly leads to a slowdown in economic growth.

However, it is uncertain how much the issuance of coupons to promote consumption can actually boost consumption in China. Xu Hongcai, chief economist at the China Center for International Economic Exchanges, a think tank, expressed concern, saying, "More consumption can only be generated if employment is guaranteed," and "Issuing coupons will have only a limited effect on consumption and may rather push inflation higher."

This content was produced with the assistance of AI translation services.