Coupons help boost consumption

As well as a health crisis, the novel coronavirus epidemic has become an existential economic challenge for poorer households and millions of companies in China, particularly those in tourism, travel, food and beverage, offline retail and entertainment.

The constrained consumption because of the outbreak means that many small and medium-sized businesses are teetering on the brink of bankruptcy. In a bid to stimulate consumption, and thus provide a lifeline to the many shops and restaurants, many cities across the country are offering vouchers and coupons to local residents.

For example, the local government in Hangzhou, capital of Zhejiang province, has provided 500-million yuan, of which 15-million yuan has been subsidies for the most needy, while the remaining 485-million yuan has been offered to residents in the form of electronic coupons.

A special form of action taken under special circumstances, such measures are intended to help to cushion the blow on retail and service businesses and ease the burden on affected families.

Previous practice has shown that such coupons are an effective means to stimulate spending. When consumer confidence was hit by the global financial crisis in 2008, many local governments issued consumption coupons to be used by residents as instruments of payment, and these spurred consumption by increasing people’s purchasing power and promoting their desire to spend.

The Chinese authorities released a guideline aimed at boosting consumption and unleashing the potential of the domestic market to cushion the blow of the epidemic on economic activities. The coupons are an outcome of this.

By bolstering people’s willingness to buy, in addition to tax rebates, fee cuts and preferential loans the coupons provide a buoyancy aid so small businesses and hard-hit families can weather the storm. Beijing, April 2

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