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Economy

Chinese cities push vouchers and night markets to lift economy

Shanghai dangles $2bn in coupons, teaming with business to boost consumption

Shanghai began hosting night markets this month to spur consumption. (Photo by Naoki Matsuda)

SHANGHAI -- Chinese cities have partnered with the private sector to issue billions of dollars in vouchers, heeding the government's push to revive the slumping economy by boosting consumption.

Throngs of people filled East Nanjing Road, a shopping district in Shanghai, late Saturday. About 20 vendor stands lined the avenue selling food, flowers and sundries.

"China has beaten back the coronavirus," a 25-year-old woman said. "I've been cooped up for weeks, so these types of events are fun."

The East Nanjing Road event is one of several night markets Shanghai began hosting this month. The city government has partnered with retailers and tech companies to hold the large-scale gatherings. Shanghai also is encouraging shopping centers to extend their operating hours during weekends.

Vouchers distributed nationwide have become the main tool for stimulating consumption. Shanghai has teamed with tech companies like Alibaba Group Holding to issue 13 billion yuan ($1.84 billion) worth of vouchers between May and June. They can be redeemed at online shopping sites, department stores, supermarkets, restaurants and elsewhere.

Beijing decided to issue 12.2 billion yuan worth of vouchers this month. The city, in cooperation with major retailers, looks to distribute 400 yuan worth of daily necessities per person to 120,000 needy people.

In many cases, the coupons are funded by a combination of local government spending and backing by tech giants. Wuhan handed out 2.3 billion yuan in vouchers, with the city picking up 500 million yuan while Alibaba and Tencent Holdings covered part of the balance. The two companies look to draw customers to their respective platforms as well.

Under China's broader stimulus program, "some 70% of the funds will be used to support the increase in people's income through direct or relatively direct means in order to spur consumption and energize the market," Premier Li Keqiang told reporters after the session of the National People's Congress -- China's parliament -- wrapped last month.

Local governments fell in line with that agenda and began propping up private consumption.

China also has lifted a general ban against street-level vendors. Officials enacted the prohibition around 2000, citing public health and efforts to improve the urban landscape. Street vendors faced crackdowns by police.

But authorities have reversed themselves in the name of rescuing microbusinesses. In Guangzhou, empty space in shopping centers and parking lots is being actively leased to street vendors.

China's economy shrank 6.8% on the year in the first quarter of 2020, its first contraction on record. Retail sales of consumer goods, a category that includes online purchases, fell 19%. The government is taking the lead to support restaurants and retail outlets, which continue to slump.

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