Local governments and companies in China are handing out huge numbers of coupons worth tens of millions of yuan in a bid to prop up consumption, which has been devastated by the Coronavirus crisis.
Retail giant Suning.com, which operates both online and via bricks-and-mortar stores, gave away coupons worth 500 million yuan ($71.4 million) at the weekend to boost on and offline sales, the South China Morning Post reports.
The coupons offer discounts of up to 500 yuan on items such as home appliances, electronics, clothes and jewellery.
Consumption has plunged in China since the start of the coronavirus epidemic, which makes “proper management of demand reasonable”, Zhang Wenlang, an analyst at Everbright Securities told the SCMP, adding that this was despite the fact that the effects of the crisis had hit the supply side the hardest.
Guidance was issued by 26 central government departments last week about increasing consumer spending, particularly on tourism and culture, the SCMP says.
And Beijing has ordered officials to lead by example. Government heads in various regions, including Nanjing city, Shandong, Hunan, Guangdong and Hainan, have appeared in public dining out and shopping. The Qinhuai district of Nanjing city, for example, ordered district heads to spend at least 100 yuan each locally.
A number of local governments have also handed out large numbers of coupons to try to boost consumption.
Nanjing City gave out e-vouchers worth 318 million yuan to consumers, mirroring action taken by Hangzhou and Chengdu during the financial crisis of 2007. Lotteries have been held for coupons that can be spent in restaurants and gyms as well as in shops for a variety of consumer items, such as books and electronics. Coupons are also being given to those on low-incomes and employees in certain labour unions.
Other local governments began giving away coupons last month. Macau gave out vouchers totalling 2.2 billion patacas (US$275 million) to residents, and earlier this month, Jinan city in Shandong gave away coupons worth 20 million yuan to boost spending on tourism and culture. Zhejiang province, Ningbo city, Hebei province and Liaoning province have also handed out vouchers.
Consumer spending accounted for more that 57% of China’s GDP last year. The SCMP reports that it's feared that revenue from domestic tourism, for example, could fall by 1.2 trillion, almost 21% over the whole of 2020. In Q1, revenue was down 69% with 932 million fewer trips being taken, according to the China Tourism Academy.
During the normally big-spending period over the Lunar New Year, takings were down by 1 trillion yuan in cinemas, catering, retail and tourism, according to the Evergrande Research Institute. This is the equivalent of 4.6% of China’s Q1 GDP growth in 2019.
Sourced from the South China Morning Post