Local govts give out vouchers to boost consumption

Some provinces and municipalities in China are stepping up policy support for the consumption sector, with many giving out vouchers to boost sales of automobiles and home appliances.

Experts said giving vouchers at the year-end is a smart move that can also help stabilize economic recovery, amid China's push for GDP growth of around 5 percent this year.

Guangdong province said recently it will launch a special program to boost cultural and tourism consumption in the rest of this year. Vouchers worth 100 million yuan ($14.29 million) will be issued. Discounts on entry tickets to scenic spots and air travel, and for hotel rooms will also be on offer.

Sanya in South China's Hainan province started offering its third batch of vouchers on Nov 20, which will be valid till the year-end. Consumers can redeem them for duty-free products.

Dalian in Northeast China's Liaoning province also issued vouchers worth 20 million yuan to boost sales of automobiles, home appliances, consumer retail products and catering services.

Zhou Maohua, an analyst at China Everbright Bank, said the new vouchers issued in winter are expected to "heat up" not only consumers' pockets but also the domestic market. "The vouchers support different industries in different regions, as per local conditions."

According to the National Bureau of Statistics, retail sales grew by 2.5 percent year-on-year in July, 4.6 percent in August, 5.5 percent in September and 7.6 percent in October, showing an apparent recovery trend in consumption.

Notably, new energy vehicles, outdoor sports, emerging electronic products and smart home appliances are experiencing good growth, the NBS said.

Since the beginning of this year, Shanghai, Guangzhou in Guangdong, Wuhan in Hubei province, Sanya and many other places nationwide have issued automobile coupons.

Jinan in Shandong province will offer subsidies of up to 5,000 yuan each to NEV buyers from Friday till the year-end. Suzhou in Jiangsu province issued coupons worth 100 million yuan in the form of "red envelopes" for car buyers, valid till March 31, 2024. Red envelopes are part of modern Chinese culture of gifting cash.

At a conference earlier this week, Huang Qifan, executive academic vice-president of the China Institute for Innovation and Development Strategy, said automobile sales are expected to become the next economic engine as the real estate recovery is still underway.

"If China's per capita GDP reaches over $20,000 over the next decade, the rate of car ownership will almost double, meaning that the automotive market still has huge potential. If measures restricting purchases, loans and license plates are relaxed, it would further spur the momentum."

According to the China Association of Automobile Manufacturers, nearly 23.49 million vehicles were sold in the first 11 months, up 4.5 percent year-on-year.

Chen Li, chief economist of Chuancai Securities, said continuous adjustments to macro policies have kept China's economic fundamentals on track to recovery in the fourth quarter and "China is expected to meet its GDP growth target for this year".

Ming Ming, chief economist of CITIC Securities, said, "With policies seeking to stabilize growth, the country's economy continues to maintain a steady and positive momentum, with consumption and manufacturing investment being the highlights."

Ming said GDP growth in 2024 is expected to be above 5 percent, with the second quarter expected to log the highest quarterly growth next year.