Local governments have been warned to do the math before they start handing out vouchers to consumers to stimulate spending and help their economies recover from the impact of the coronavirus epidemic, reported Caixin.
“Local governments should pay attention to two things when making these policies,” Ha Zengyou, director-general of the employment and income distribution department at the National Development and Reform Commission, said at a press briefing on Wednesday. “First, they should consider how much funding they can afford and second, they must ensure that the measures can bring real benefits to businesses and the public.”
Ha’s comments came after three major cities in eastern China –– Nanjing, the capital of Jiangsu province; Jinan, the capital of Shandong; and Ningbo, a port city in Zhejiang –– issued coupons with a combined face value of more than RMB 400 million ($56.6 million). The vouchers can be spent on specific activities such as tourism, entertainment and catering, some of the sectors hit hardest by the epidemic. Other towns and cities, and even companies, could follow suit as they return to an initiative used during the global financial crisis to boost spending.
But with many local authorities already cash-strapped due to slowing growth, and even outright declines, in tax and other fiscal revenue as a result of central government policy to slash taxes and fees, they are in danger of overstretching their already thin resources.