Customers are seen at a shopping mall in Qiaoxi District of Shijiazhuang, north China's Hebei Province, Feb. 5, 2021. Many commercial complexes and shopping malls in Shijiazhuang resumed operation in an orderly manner on Friday.Photo:Xinhua

Multiple localities in China have issued coupons and digital red envelops among a variety of benefits, aiming to bolster consumer confidence and encouraging local spending during the upcoming May Day holidays.

Analysts said the issuing of coupons is conducive to promoting short-term spending from April 30 to May 4, creating a "multiplier effect" and helping ramp up consumption in the second quarter.

Tech hub Shenzhen in South China's Guangdong Province which has just emerged from recent COVID-19 outbreaks has announced it will issue a total of 500 million yuan ($75.55 million) coupons starting from Thursday, one of the largest sums announced by a Chinese city so far.

Ningbo in East China's Zhejiang Province plans to launch its largest ever consumption voucher issuance with a total more than 300 million yuan, covering more than 100,000 merchants across catering, auto, entrainment, home appliances and tourism.

Fuzhou, in East China's Fujian Province is handing out a total of 120 million yuan of coupons for tourism and spending from Thursday. The city has also planned to organize more than 200 promotional activities to offer discounts worth more than 370 million yuan, according to Fuzhou Municipal Bureau of Commerce.

The issuing of coupons is conducive to lifting short-term consumption, restoring consumer confidence and alleviating pressure on merchants especially those in service focused sectors which have been hit hard by the epidemic, Cong Yi, professor of the Tianjin University of Finance and Economics, told the Global Times on Thursday.

Compared with giving out cash, consumption coupons will have a certain "multiplier effect" with every 1 yuan generating about 3 to 5 times that amount in large cities such as Shenzhen and Guangzhou, Cong said.

Analyst predicted that brick and mortar retail business, such as sales in supermarkets and restaurants are most likely to reap benefits from the coupons due to a "staying put" policy during the May Day holidays.

The issuing of consumption vouchers will give a boost to the retail and catering industry, as coupons for the purchase of daily necessities will be welcomed for people suffering under the impact of COVID-19 flare-ups, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Thursday.

"Consumption coupons for tourism and scenic spots may not be fully used during the May Day holidays as long distance traveling is not encouraged," Dong noted. 

A resident in Shenzhen surnamed Zhu said that the amount of vouchers in Shenzhen is so big and it is expected to prompt more shopping and local spending during the holiday as they cover nearly all areas of everyday life. 

"I was lucky enough to get my hands on a couple of digital vouchers in the previous rounds. This time, I am looking forward to getting some digital yuan red packets," Zhu said.

In addition to regular coupons, multiple cities including Shenzhen have issued red envelopes in digital yuan.

Shenzhen is handling out 30 million yuan in the form of digital yuan red envelopes out of its 500 million yuan package. Hexi district in North China's Tianjin also has decided to give a total of 400,000 yuan in digital red envelopes to promote digital yuan trials across various application scenarios.

Digital yuan could be an effective tool to offer targeted help to individuals and smaller businesses hit hard by the pandemic, Chen Bo, director of the Digital Finance Research Center at the Central University of Finance and Economics, told the Global Times on Thursday.

"One of the features of digital yuan red packets is that they can be allocated to designated groups, scenarios and vendors," Chen noted.

Chinese officials on Monday called for more support and measures to help affected businesses and boost consumer spending.

This comes after China's retail sales, a main gauge of consumption, fell 3.5 percent year-on-year in March, the first contraction since August 2020 as recent COVID-19 flare-ups restricted consumption in some major areas. 
The State Council, China's cabinet, issued guidelines on Monday, calling for more efforts to promote the orderly recovery of consumption and to stabilize consumer spending.

Authorities have pledged to step up relief measures by reducing taxes and fees for small businesses, helping the retail and catering industries to step up epidemic prevention measures with subsidies, and implementing cuts in electricity fees and rental costs, among other measures to stabilize market entities for consumer services.

Cong noted that the recovery in May could be essential to restore the consumption in the second quarter.
"To achieve the consumption rebound, China's 'Dynamic zero-COVID policy' must be enforced swiftly to bring the latest outbreak of COVID-19 under control," Cong said.