Coronavirus: China voucher scheme to revive retail hits the buffers, sparking debate about cash payments
- Local governments in 42 cities have handed out more than 6.5 billion yuan (US$916 million) in vouchers to lift consumption that has been hard hit by Covid-19
- But reports suggest the subsidies are not always reaching their intended targets, raising questions about why China does not opt for direct cash relief
China’s policy of handing out billions of yuan in shopping vouchers, instead of offering direct cash payments, is having limited effect in offsetting the economic damage of the coronavirus, research shows.
On average, every Chinese resident received about 19.6 yuan (US$2.80) worth of vouchers, while 29 per cent of cities taking part gave each person more than 30 yuan, the study said.
“The focus of the consumer voucher policy is to bail out key industries [catering, tourism, and retail], but the overall amount is still small,” said researchers Xu Qiyuan and Zhang Zixu, from the Institute of World Economics and Politics at CASS, in the study published earlier this month.
“Local governments are fighting on their own based on their financial resources. As a result, the more developed areas in the east provided more vouchers, while less developed provinces in central and western China gave less. So it’s difficult for these vouchers to truly benefit rural consumers.”