There are few signs that Beijing is willing to use the solution of handing out money to people like some countries.
The voucher distribution program first appeared in Nanjing, the capital of Jiangsu province, in mid-March 2020.
So far, at least 30 cities across China are giving people shopping vouchers for specific products, with a total value of 5 billion yuan ($704 million), accounting for less than 0.01
`Cash handouts will not translate into equivalent spending as people tend to deposit money in banks during uncertain times,`Â Zhang Jun, Chief Economist at Morgan Stanley Huaxin Securities, explains
Shoppers wear masks on the streets of China.
Zhu Zhengfu, a member of the Chinese People’s Political Consultative Conference, a legislative advisory body, once suggested that the government consider giving each citizen 2,000 yuan ($282) as a subsidy for
Mr. Zhu, who is also vice president of the All-China Bar Association, said this amount is equivalent to the average person’s monthly consumption expenditure last year, which can save many small businesses.
However, in contrast to the US, Hong Kong and Japan, which have policies of handing out money directly to households, China’s central government’s economic support plan relies heavily on injecting money into the system
Last year, personal consumption accounted for about 60% of China’s GDP growth.
Despite such pressure, experts predict that China’s central government will not implement the idea of handing out cash to households nationwide.
`The Chinese government likes to spend a lot of money, but not on the people. This time is no different,` said Keith Hu, Chief China Economist at Macquarie Capital.
The lack of direct aid to households is sparking a debate in China.
Meanwhile, China’s latest economic support plan this time includes promoting investment in infrastructure, notably data centers and 5G communications.
However, Wang Jun, chief economist at Zhongyuan Bank, warned that much of the money the government is planning to allow local governments to raise in bonds will be wasted on grassroots projects
`Vouchers are one way to help the consumer industry and low-income families. But the government has the ability to carry out a larger spending stimulus, if only they adjust the redistribution of the economic support package,`
China has yet to reveal its 2020 growth target and how it plans to achieve it.
`This will be a test to see whether China will reconsider planned economic thinking or truly believe in the role of the market and the people,` Wang added.