Customers shop in a supermarket in Taiyuan, north China's Shanxi Province, March 20, 2020. Life and production have gradually resumed here in Taiyuan under strict measures to prevent and control the novel coronavirus epidemic. Photo:Xinhua

Hangzhou, capital city of East China's Zhejiang Province, has distributed 28.89 million yuan ($4 million) worth of coupons to encourage consumption, which in turn has driven consumer spending of 453 million yuan in three days.

Local governments in China are distributing consumption coupons with a total value of 4 billion yuan to stimulate consumption amid the coronavirus pandemic.

Experts believe the consumption coupons play a significant role in boosting consumption confidence and supporting industrial recovery.

The Hangzhou government has announced it will give out subsidies worth 500 million yuan to boost consumption, of which 15 million yuan will be for needy people and 485 million yuan will be used for consumption via digital payment platforms.

The first batch of coupons was released on Friday and is valid until April 2. For each payment exceeding 40 yuan at designated vendors, consumers can receive subsidies of 10 yuan from the government. Each consumer can enjoy a subsidy of up to 50 yuan.

The effect of the coupon campaign has been obvious. 

As of 4:00 pm on Sunday, 28.89 million yuan of subsidies had been redeemed, which in turn has driven consumer spending of 453 million yuan, according to data from the Hangzhou Municipal Bureau of Commerce.

Street vendors, supermarkets, convenience stores and restaurants were the most common places where the payments were made.

Nancy Qu, a consumer in Hangzhou told the Global Times that she had applied for the coupons and will use them for shopping at offline venues. 

"I think it will help to boost offline and physical consumption," she said.

The issuance of digital coupons is the best and quickest way to boost consumption amid the economic downward pressure, Shi Jianxun, an economics professor at the School of Economics and Management of Tongji University, told the Global Times on Monday.

"By giving subsidies, it can make up for the losses for low-income groups who have economic difficulties because of the pandemic and it can stimulate consumption," Shi said.

Compared with distributing cash, experts believe the digital coupons have a better effect to boost consumption as they need to be used before the expiration and can generate additional spending.

"If you give out cash people may just keep the money," Shi added.

Aside from stimulating consumer spending, it can also alleviate the difficulties of the most affected industries, such as services, entertainment, and cultural industries, Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Monday. 

"The approach can help these industries to recover as soon as possible and ease their pressure from rent, income shortage and difficulties of capital turnover," Cong said.

According to the National Bureau of Statistics, the total retail sales of consumer goods in China in the first two months of this year fell by 20.5 percent year-on-year, with revenue for the catering industry falling by 43.1 percent year-on-year. 

Aside from Hangzhou, nearly 40 other cities have issued similar coupons for use in the cultural, tourism and catering industries with a cumulative total of over 4 billion yuan, according to International Financial News.

Shi said the campaign should be promoted in more cities with larger subsidies and could be distributed in batches with priorities for different target groups.

"There should be more subsidies given to those in need. There should also be an expiry date to encourage quick consumption," he said.

"In the early stages, the usage scope can be restricted to industries that have been badly hit by the pandemic and then extended to other industries such as electrical appliances and automobiles in the medium and long term," he added.