Coupons boost local consumption, but long-term steps still needed

Local governments across China resorted to coupons again so as to ride a golden wave of consumption as the New Year approaches. The stimulation got instant result, but experts focusing on long-term called for more measures, including increasing residents' disposable income, to achieve the aim, Securities Daily reported on Thursday.

In December, cities such as Nanjing, Zhengzhou, Hefei, Chengdu and Chongqing gave out coupons to encourage the public to spend money on catering, entertainment, shopping and traveling.

Hefei, the capital city of East China's Anhui province, issued coupons worth 40 million yuan ($6.28 million) in the first round last Friday, composed by 15 million yuan for catering, 15 million yuan for shopping malls and supermarkets and 10 million yuan for automobiles. From Dec 17 to 26, Zhengzhou, Central China's Henan province, issued 5 million catering coupons with the cooperation with the Cloud QuickPass of China UnionPay.

Ying Xiwen, a senior researcher at China Minsheng Bank Research Institute, said to Securities Daily that issuing vouchers promotes short-term consumption and restores consumer confidence; and it also provides indirect subsidies to businesses to increase their short-term income and ease operating pressure.

In addition, Ying said if the use of consumer coupons has required limits, such as through cloud flash payment or digital currency, to some extent, it will also promote the application of specific channels.

The latest data from the National Bureau of Statistics showed that the total retail sales of consumer goods were 4.1 trillion yuan in November, an increase of 3.9 percent year-on-year, 1 percentage point down from the previous month. For the whole year, the year-on-year growth rate of total retail sales of consumer goods has fallen from the double-digit at the beginning of the year to single digits.

Liu Xiangdong, a researcher at the China Center for International Economic Exchanges in Beijing, told Securities Daily that due to the repeated pandemics, the recovery of consumption in November was less than expected. As a whole, the current service industry has not yet returned to the pre-epidemic level, and some contact services have been significantly affected, added Liu.

The issuance of consumer vouchers helps to promote a rebound and boost consumption at the end of the year. It is estimated that the total retail sales of consumer goods in December is expected to maintain a year-on-year growth of more than 4 percent, said Liu.

Stabilizing employment and ensuring stable income is the fundamental way to promote consumption growth, Zheng Houcheng, head of the research institute at Yingda Securities Co Ltd, said to Securities Daily.

According to Zheng, it is also necessary to establish a complete social security system to reduce residents' needs and release more income for consumption. Meanwhile, government needs to make every effort to promote "common prosperity", raise the income level of low-income group, and enhance intensity for mandatory consumption.