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Cities try coupons for boost

By Cai Ke (China Daily)
Updated: 2009-02-19 07:43

China's coastal cities are handing out tourism coupons worth tens of millions of dollars, urging people to spend amid the economic slowdown.

Related readings:  Coupons not a fair way  Civil servants to be paid in coupons  Coupons for low-income families effective in boosting demand

A plan to send out 80 million yuan ($11.7 million) worth of tourism coupons was approved by the government in Zhenjiang, Jiangsu province, yesterday. They will be given to residents in the city and neighboring cities, People.com.cn said.

Guangdong province yesterday also launched a 20 million yuan plan to encourage people over the age of 55 to jump on the tour bus.

The cities of Ningbo and Nanjing said on Monday that they will offer tourism coupons worth 8 million yuan and 20 million yuan, respectively, to local residents.

Most coupons are redeemable for between one and three months. They can be used for package tours at designated travel agencies or as tickets to certain scenic spots.

The moves appeared to answer the call from Deputy Minister of Commerce Jiang Zengwei. Earlier this month, Jiang said businesses could use non-price-based measures to stimulate consumption.

Retail sales grew only 13.8 percent during the weeklong Lunar New Year holiday, despite deep discounts by retailers. Last year, Spring Festival sales surged 16 percent year-on-year.

Some economists believe coupons are effective tools to boost demand amid a sluggish economy.

Nobel Economics Prize winner Robert Mundell suggested late last year that China should issue 1 trillion yuan worth of coupons to all citizens. He said it could significantly boost demand.

An official from Nanjing tourism bureau said 20 tourism million yuan in coupons could prompt people to spend 200 million yuan, the local newspaper Xinhua Daily reported, without saying how the official came up with the figures.

"Before, it was to restrict consumption so you don't waste," Hangzhou resident Si Denqi told the Los Angeles Times, comparing the new coupon policy with that under a planned economy in the 1970s. "This time the government wants us to spend more."

But some economists said coupons can only be effective for a short time.

"After cash coupons are given out, you have a one-off stimulus. As people use up coupons, you have to give out more each month to sustain the boosting effect," said Shi Jianxun, an economist with Shanghai's Tongji University.

The efforts to boost consumption come as the global financial crisis has pushed consumer confidence in China to its lowest level in six years.

A confidence index compiled by research group Horizon stood at 59.9 at the end of 2008, a decline of 4.5 points from September.

AFP contributed to the story