17 of China’s province-level administrative entities have adopted consumer voucher policies to help stem the impacts of the COVID-19 outbreak on their local economies.
In addition to 17 province-level administrative entities, at least 30 Chinese municipalities have also issued similar policies, including the cities of Shenzhen, Foshan, Zhuhai and Jiangmen in Guangdong province alone.
Shen Jianguang (沈建光), chief economist with JD Data, said to state-owned media that consumer vouchers were a timely economic measure following the initial containment of COVID-19 in China.
Shen points out however that they need to match the accelerated schedules for work resumption, and that timeframes are needed for their release and usage.
“Looking at them from the perspective of the features of transmission mechanisms, compared to traditional demand management policies consumer vouchers are clearer in their targets and more direct in their function,” Shen said. “This satisfies China’s current needs at present.”
Shen made several recommendations for the use of consumer vouchers by local economic policymakers:
- Setting of rational time restrictions on the usage and issue of consumer vouchers. “Following the removal of COVID-19 restrictions, consumption in the second quarter is gradually acquiring conditions for recovery. Starting from the third quarter there could be a rebound, and in principle we recommend weighting the usage term for consumer vouchers towards before the end of the second quarter.”
- Consideration of both stable growth and maintaining living conditions when it comes to the design of the consumer vouchers. A focus on sectors more adversely affected by COVID-19 such as food and beverage, entertainment and tourism, in order to stabilise services sector growth. A focus on the provision of consumer vouchers to disadvantage demographics.
- “Scientific arrangement” of fund release and fund sources for the vouchers.
- Effective coordination by the Chinese central government of fiscal burden-sharing mechanisms. “The central government must further effectively coordinate fiscal sharing mechanisms between the central and local authorities.”
In 2019 China’s total consumer goods retail sum was 41.2 trillion yuan, for YoY growth of 8%.
Consumption’s rate of contribution towards China’s economic growth was 57.8%, making it the country’s biggest economic driver for the sixth consecutive year.