Chinese cities launch new round of voucher campaign to boost domestic consumption; experts predict retail growth to top 5% in Q2
Published: Mar 17, 2023 06:57 PM
Employees assemble cars at a vehicle manufacturer in Bozhou, East China's Anhui Province on July 12, 2022. Assembly lines at the manufacturer are busy stamping, welding, painting and putting together new cars despite hot weather. Photo: cnsphoto

Employees assemble cars at a vehicle manufacturer in Bozhou, East China's Anhui Province on July 12, 2022.  Photo: cnsphoto

Various cities in China are distributing a new round of consumption vouchers to boost domestic demand, targeting auto and home appliances in a bid to further shore up consumer confidence.

Chinese economists predicted that retail sales will maintain a fast recovery trend, and the growth may top 5 percent in the second quarter, given a rebound in confidence and supportive policies. 

From Friday, Longquanyi district in Chengdu, Southwest China's Sichuan Province, distributed consumption vouchers worth 100 million yuan ($14.55 million) for auto promotions, according to the official WeChat account of the Chengdu Municipal Government on Friday. 

According to the announcement, subsidies of up to 150,000 yuan for one car are available, and the campaign could be an event that covers the most new-energy brand models and have the longest duration in the history of Chengdu's auto promotion activities.

This campaign is one of a raft of similar activities across China, as various provinces and municipalities issue consumer vouchers with a focus on automobiles and home appliances. March has also been highlighted as a month for lifting domestic demand by the Ministry of the Commerce.

The Beijing government said each consumer can apply for consumption vouchers worth 1,600 yuan to purchase 55 types of green smart products such as air conditioners, washing machines, mobile phones, laptops, and drones, adding that the campaign will last till the end of this month. 

The provincial-level commerce department of Central China's Hubei Province said the province will launch a first round of consumption vouchers in March worth 500 million yuan.  

"This round of the promotion is different from the previous ones, as economic activities are rebounding following China's optimization of its COVID-19 response," Tian Yun, an independent macro analyst, told the Global Times on Friday.

Previously, various governments had also launched consumption voucher campaigns to lift domestic demand, but the leverage effect was limited given the impact of the epidemic. The campaign in March came just after China changed its COVID response in light of the evolving situation, and economic growth is now at a turning point, which will increase the leverage effect of the vouchers, Tian added. 

"It is possible we will see retail sales growth of more than 5 percent in the second quarter of this year," Tian said. 

China has seen V-shaped consumption, as retail sales totaled 7.71 trillion yuan in January and February, a year-on-year increase of 3.5 percent, data from the National Bureau of Statistics showed on Wednesday. 

The performance is a stark contrast with the previous negative growth for three consecutive months from October to December of 2022. Retail sales in November 2022 saw a negative growth of 5.9 percent. 

Promoting consumption is high on the government's agenda this year, as the annual Central Economic Work Conference held in mid-December noted that the country would prioritize the recovery and expansion of consumption.

"We should give priority to the recovery and expansion of consumption. The incomes of urban and rural residents should be boosted through multiple channels. We should stabilize spending on big-ticket items and promote recovery in consumption of consumer services," said the Government Work Report delivered at the just concluded two sessions.

A survey released by the China Consumers Association on Wednesday showed that nearly 80 percent of respondents have confidence in the economic outlook for the coming year.