Chinese cities issue coupons to boost consumption as Covid restrictions bite

By Lorena Cantó and Victor Escribano

Beijing/Shanghai, Apr 29 (EFE).- Authorities in China have told the population to avoid traveling to other provinces ahead of Labor Day as the government introduced measures on Friday to mitigate the economic fallout of an ongoing outbreak that has caused a spike in Covid cases.

China’s Transport regulator said it was expecting around one billion trips to be made during the holiday period, 62% less than the previous year.

The Chinese mainland has accrued over 550,000 infections so far this month and has registered local transmission in all its provinces and regions except Tibet.

“Due to the latest outbreak of Covid-19 and stringent epidemic protocols, most travelers are opting for short-distance, even local trips,” Zhou Min, deputy director of the transport ministry’s emergency office, said according to the state-run China Daily newspaper.

NO TOURISTS IN BEIJING, SHANGHAI

The ministry’s forecast is that trips to the Yangtze River delta, where the eastern port city of Shanghai is located, will drop notably given the financial hub is still largely in lockdown.

Although Beijing is not technically closed to visitors, the main tourist attractions, such as the Universal theme park, the Birds Nest Stadium and the National Aquatic Center will restrict access to visitors with negative PCR tests only.

In recent days some 200 new cases have been reported in the capital and most of its 23 million inhabitants have undergone a triple round of PCR testing, with the majority of cases detected in the populous and vast Chaoyang business district.

COUPONS TO BOOST CONSUMPTION

Many localities in China have issued physical and digital coupons to promote local consumption given most will have to avoid travel during the Labor Day bank holiday.

The Cantonese city of Shenzhen (southeast) will distribute coupons worth 500 million yuan ($75.9 million), and in Ningbo and Fuzhou (both east) the equivalent of $45.5 million and $18.2 million will be handed out respectively to spur domestic spending.

Analysts quoted by the state-backed Global Times newspaper described a “multiplier effect” that would trigger consumption in the short term and restore consumer confidence.

According to Cong Yi, a professor at the Tianjin University of Finance and Economics, every 1 yuan (in coupons) could generate about 3 to 5 times that amount in large cities such as Shenzhen and Guangzhou.

A May recovery will be crucial to Beijing’s economic recovery in the second quarter and for reaching the government’s growth target of 5.5%, according to the economist

“To achieve the consumption rebound, China’s ‘Dynamic zero-COVID policy’ must be enforced swiftly to bring the latest outbreak of COVID-19 under control,” Cong added.

LIKE A BAND-AID FOR AN AMPUTATION

However, the optimism of Chinese propaganda and experts contrasts starkly with official data.

In March, before any major restrictions had been ruled, retail sales, a gauge of China’s consumption rate, contracted by 3.5% year-on-year.

According to Alicia García Herrero, Asia-Pacific chief economist for Natixis, sales in the catering sector suffered a particularly harsh setback with a 16.4% drop in revenues in March, after recording a year-on-year growth of 8.9% in the first two months of the year.