Hearing of the end to citywide lockdowns was music to Fan Xingwei’s ears, as it meant that his cafe in Chengdu, Sichuan province, could finally resume normal operations. The 27-year-old borrowed 300,000 yuan (US$43,000) to open his cafe in June, and while it has not yet seen the foot traffic he hoped for, it is still being frequented by a few young people every day. “I think I’ve been lucky to set up a cafe in Chengdu, since the city has experienced only about a week of lockdowns so far,” said Fan, who noted how rare such a short lockdown period was in a country where some cities, including Shanghai, were forced to endure months-long shutdowns this year. Gaoxin district, where Fan’s cafe is located, this month issued a new round of consumption vouchers worth 100 million yuan (US$14.3 million). I’m just hoping now that things will get back to normal and that the government will stop changing the pandemic policy suddenly Fan Xingwei But Fan missed the window for registering online to take part in the scheme as a merchant, so now he is hopeful that another round of vouchers will help lure customers in the new year. “I’m not really expecting consumption vouchers to bring me very much traffic, I’m just hoping now that things will get back to normal and that the government will stop changing the pandemic policy suddenly,” he said. “We need a stable environment.” Local governments across China are eager to revive and bolster their sluggish consumption by issuing vouchers after retail sales fell by 5.9 per cent last month compared to a year earlier. <!--//--><![CDATA[// ><!-- !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r<t.length;r++){if(t[r].contentWindow===e.source)t[r].style.height=e.data["datawrapper-height"][a]+"px"}}}))}(); //--><!]]> But many economists say a more effective means of encouraging people to spend money as the country reopens would be to ensure that they have stable jobs and sufficient income, although this largely depends on how quickly the country’s private sector recovers. Provinces such as Guangdong, Hainan, Jiangsu and the Xinjiang Uygur autonomous region have issued such vouchers this month to spur spending among residents on everything from food and cars to travel and home appliances. The initiatives are expected to boost residential consumption growth by close to 1.4 trillion yuan (US$200 billion) in 2023, driving annual retail sales growth back up by 3.1 per cent if China can issue further consumption vouchers worth 100 billion yuan in 2023, according to a report by Topsperity Securities. However, the current batch of consumption vouchers may not be ideal for a long-term consumption recovery, as the real constraint is citizens’ income, according to Mao Zhenhua, director of the Institute of Economic Research at Renmin University in Beijing. I don’t see them as consumer vouchers – they are, in fact, promotional vouchers Mao Zhenhua “I don’t see them as consumer vouchers – they are, in fact, promotional vouchers,” Mao said, with some vouchers offering discounts which are paid for by the government and business. But instead of vouchers that require people to spend a fixed amount of money to get a discount, Mao suggests that the central government give China’s 1.41 billion residents cash vouchers worth 5,000 yuan (US$716) each. Beijing has so far been reluctant to follow the likes of the United States and Hong Kong in rolling out a nationwide scheme, wary of adding to its debt burden. China instead needs to improve the population’s purchasing ability by increasing most people’s income, Mao added. He also noted how Beijing vowed to support the private sector during this month’s central economic work conference, but he said the market did not react as expected. The most important thing the government needs to do now is quickly bring back normal production and … restore people’s normal working lives as soon as possible Zhao Xijun “Rome wasn’t built in a day,” Mao said. “Now we see private enterprises are reluctant to invest and borrow, but their lying-flat mentality did not suddenly arise overnight.” And although Beijing has vowed to treat state-owned enterprises and private firms equally, Mao said the government needs to do more to create a level playing field for the private sector. His thoughts were echoed by Zhao Xijun, a professor with the School of Finance at Renmin University, who said he does not believe that consumers in China lack the willingness to purchase, but they lack the means to do so. “To promote consumption, the most important thing the government needs to do now is quickly bring back normal production and … restore people’s normal working lives as soon as possible, so they have a steady source of income to support their expenditures,” Zhao said. Many people have opposed such measures, saying that it would not stimulate consumption Yao Yang The Labour Day holiday at the start of May will be a prime opportunity to boost consumption, according to Yao Yang, dean of the National School of Development and director of the China Centre for Economic Research at Peking University. Yao even suggested that the holiday be extended to further boost consumption. “Many people have opposed such measures, saying that it would not stimulate consumption,” Yao said at an economic seminar last week. “But we have seen a growth of consumption to a certain extent in the US and Europe. This is also why the inflation rate is high there.” The Blue Book of China’s Economy for 2023, recently released by the Chinese Academy of Social Sciences, also proposed capitalising on holiday opportunities to boost consumption. China puts private sector front and centre in fresh economy-boosting vows It also encouraged government authorities to make use of key festivals, including the Lunar New Year holiday in January, to fill in the missing consumption gaps, create more events and increase the festive atmosphere across China. Besides promoting more major festivals, the annual report also proposed developing a “weekend economy” by extending the operating hours of sites and public transport. It also proposed that the government increase the threshold for taxing residents, thereby giving them more disposable income. The report also suggested reducing taxes on certain goods such as home appliances, including refrigerators and washing machines. It also said the internet sector should take on the responsibility of hiring more people and boosting consumption, while it also pinned hopes on private enterprises, suggesting that the country provide them with rent relief and subsidies.