US Proposes "Disaster Basic Income"... China Offers "Cash Vouchers" (Summary)

Senator Romney: "Give $1,000 to All Citizens to Stop COVID-19 and Boost Economy"
Economist Mankiw: "Cash Payments Needed for Social Distancing"
China: "Issuing Cash Vouchers to Revive Consumer Sentiment"

[Asia Economy Beijing=Special Correspondent Park Sun-mi, Reporter Na Ju-seok] Amid the spread of the novel coronavirus infection (COVID-19), calls for extraordinary measures such as disaster basic income have been raised in the United States. In China, consumption coupons are being revived for the first time in 12 years, as the world's first and second largest economies are fighting for economic recovery.

On the 16th (local time), U.S. Senator Mitt Romney proposed disaster basic income as an additional support measure against the spread of COVID-19. The idea is to give direct cash payments to American adults to prevent the spread of COVID-19 and its effects.

Senator Romney said at a press conference, "While expanding paid sick leave support, unemployment benefits, and the Supplemental Nutrition Assistance Program (SNAP) are important, giving $1,000 directly will help those who cannot quickly find answers from various government measures." He added, "Similar measures were taken by the U.S. Congress in 2001 and 2008," and argued that "the $1,000 will reduce short-term spending burdens on households and workers and increase consumption." Senator Romney is a prominent politician who ran as the Republican presidential candidate against former President Barack Obama in the 2012 U.S. presidential election.

The American internet media Vox introduced that until a few months ago, the proposal to give $1,000 to American adults was a minority opinion in U.S. politics, but the situation has completely reversed due to COVID-19 and recession concerns. It especially evaluated the proposal coming from the Republican Party, which advocates conservatism, as a surprising 180-degree turnaround.

Earlier, U.S. Representative Tulsi Gabbard, who is participating in the Democratic presidential primary, also introduced a resolution proposing to give $1,000 every month to all American adults until the COVID-19 emergency ends.

Previously, the U.S. Congress and government have been reviewing support measures worth $8.3 billion related to COVID-19. However, voices within the U.S. have grown louder, saying that tax cuts such as payroll tax reductions are insufficient and that direct cash payments are necessary.

Academia also supports these claims. Nouriel Roubini, a New York University professor who predicted the global financial crisis, argued that $1,000 should be paid not only to adults but also to children. Professor Roubini stated on Twitter, "(Giving out $1,000 each) would cost about $35 billion, but this is less than 2% of the U.S. Gross Domestic Product (GDP)," and added, "The funds can be raised solely through bond issuance." Gregory Mankiw, a Harvard University professor famous for Mankiw's Economics, also agreed with the argument for giving direct cash to citizens. He explained that such measures are not for economic stimulus purposes but for 'social distancing.'

In China, local governments and companies are issuing 'coupons' that can be used like cash to boost consumption sentiment, which has been depressed due to the impact of COVID-19.

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-like coupons worth 500 million yuan (approximately 88.3 billion KRW) to customers since last weekend. These cash-like coupons can be used to purchase home appliances, clothing, jewelry, and more at 200 Carrefour stores nationwide, as well as online and via mobile apps.

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 number lottery system regardless of whether the recipients are local residents or 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.

Since some cities such as Hangzhou and Chengdu issued coupons to stimulate consumption during the 2007-2008 global financial crisis, this is the first time that Chinese local governments have consecutively issued consumption coupons to revive the economy.

The Chinese central government has instructed local government officials to lead regional economic consumption.

[Image source=Reuters Yonhap News]

In response, senior officials from Nanjing City, Shandong Province, Hunan Province, Guangdong Province, and Hainan Province publicly demonstrated the government's commitment to consumption stimulation by dining at restaurants and shopping.

Consumption in China has been severely depressed 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 economic growth slowdown.

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