(Yicai Global) May 17 -- Chengdu, Shenzhen, Guangzhou and other local governments around China are distributing millions of US dollars’ worth of coupons to stem the slide in retail sales as the recent wave of Covid-19 subsides and to get people back into the habit of spending.

Consumption is suppressed due to the outbreaks, Ou Jianling, secretary general of the Chengdu Retail Business Association, told Yicai Global. The Chengdu government's issuance of vouchers is a very good way to get people spending again.

In 2020 after the first outbreak of Covid-19, the southwestern municipality distributed CNY700 million (USD103 million) in coupons to residents which greatly helped to get consumption back on track. Now the city has launched a shopping gala lasting from May 15 to June 30 and will be joining hands with local vendors to hand out CNY600 million (USD88.8 million) worth of vouchers.

Issuing coupons is not intended to increase consumption dramatically, but rather to whet people’s appetite to spend again and get people back into brick-and-mortar outlets, Yang Chang, chief analyst at Zhongtai Securities, told Yicai Global.

It is not so much a lack of money that is the problem, but the willingness to spend, Yang said. Most people still have the means to splurge but they need some encouragement. Shenzhen, for instance, issued CNY500 million (USD74 million) in spending vouchers after the latest flare-ups, that could be used in restaurants, scenic spots, hotels and other places, and this helped to loosen residents’ purse strings, he added.

Vouchers have an immediate short-term effect in driving up spending and thus are crucial to the recovery of Chinese economy, said Shen Jianguang, chief economist at e-commerce giant JD.com. The central government should give local governments financial support to issue more coupons.

Editors: Tang Shihua, Kim Taylor