China is giving away billions of yuan in shopping vouchers and offering other financial sweeteners to coax shellshocked consumers to start spending again.
Although the country’s shopping malls and restaurants have largely reopened their erstwhile customers are proving reluctant to return as they worry about both their physical and economic health, against a backdrop of rising unemployment.
The strict lockdown imposed to halt the spread of coronavirus in China resulted in a shock contraction of the world’s second-largest economy in the first quarter of 2020. Retail sales plunged by a fifth in both January and February.
Now local authorities and businesses are looking for creative ways to stimulate demand. Some cities are encouraging two-and-a-half-day-long weekends to boost spending, with Communist party officials told to set an example by going shopping and eating out.
Last month, Suning, a major retail group selling electronics, clothing and food, dished out 600m yuan (£70m) worth of vouchers to shoppers while Chinese web giant Tencent has launched a “buy now, pay later” credit feature on its messaging app WeChat.
“China’s consumer recovery will shed some light on what may happen in the rest of the world as the outbreak eventually peaks and recedes,” said Ned Salter, head of equities research at Fidelity International in a note.
“There are clear signs of recovery across segments, although the pace of normalisation is somewhat slow. We need to see more consumer confidence to sustain the improvement.”
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