Coronavirus: China urged to hand out consumption vouchers to help local governments, boost spending

Name: China’s Singles’ Day tempered by strict Covid rules and slowing economy
Uploaded: 2022-11-22T07:31:56.000Z
Duration: 2 min 7 s
Description: China’s Singles’ Day tempered by strict Covid rules and slowing economy

Economists say issuing cash vouchers directly to citizens is the quickest way to stimulate growth from the demand side

Beijing’s zero-Covid policy has hammered spending in China and local government finances are being stretched thin

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Economists say issuing cash vouchers directly to citizens is a quick way to stimulate growth. Photo: Bloomberg

Mia Nurmamat

Published: 3:31pm, 22 Nov 2022Updated: 5:36pm, 22 Nov 2022

China’s central government should issue consumer vouchers to ease financial pressure on local authorities and revive demand in its slowing economy, economists say.

Beijing’s zero-Covid policy has hammered consumption in the world’s No 2 economy and local government finances have been stretched thin by the burden of maintaining the hardline coronavirus controls.

Economists say issuing cash vouchers directly to citizens is a quick way to stimulate growth.

“It is now an immediate priority to lift the economy from the demand side,” said Mao Zhenhua, director of the Institute of Economic Research at Renmin University of China, at last week’s China Macroeconomic Forum.

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China’s Singles’ Day tempered by strict Covid rules and slowing economy

Mao said the major shortfall in China’s economy is a serious lack of consumption, which has been constrained by uncertainties induced by the central government’s zero-Covid policy. People are less optimistic about the future and, as a result, more inclined to save, he said.

Beijing should issue consumer vouchers of 5,000 yuan (US$700) to every resident, including minors, in the form of e-currency, instead of the traditional merchant discount coupons.

“Many of the consumer vouchers we mentioned before are actually discount coupons from merchants, they don’t have a cash value,” Mao said.