But doubts persist. The coupons worth small amounts of money have been rubbished as being not worth the effort - like a chicken rib, in Chinese slang. In an article published on Caijing, a financial outlet, Xu Qiyuan, a research economist at the Chinese Academy of Social Sciences, analyzed what coupons had been issued in 42 cities by April 27 and found that among the issued 6.52 billion yuan (US$919.9m), each person would get 19.6 yuan (US$2.8) on average. Only 29 percent of the cities gave out coupons worth more than 30 yuan (US$4.2) per capita. Several people interviewed told NewsChina that they had received coupons for 5 yuan (US$0.7) or 10 yuan (US$1.4) but felt no inclination to use them.
Some dismissed the government’s efforts to make them spend more instead of increasing their income. Under a NewsChina article discussing coupons, one netizen commented, “Using coupons means you have to take more money out. It’s no different than the promotional tricks used by [e-commerce site] Taobao vendors, only with a nicer name.”
Xu said that the coupons put more emphasis on helping enterprises and are promotional in nature by limiting their use to certain fields, and some cities set high thresholds, like 50 yuan off a purchase of 800 yuan, which equates to a US$7 discount on goods worth US$113. The coupons in many places can only be used in downtown areas, so are costlier for people from rural areas to benefit from. And nearly all coupons are electronic and require mobile payment, which is challenging for the elderly and some low-income groups who actually need aid the most.
“High-income groups will spend anyway. [In this special time] only when people with low incomes go out to spend can consumption be shored up. But the coupons are not doing enough to benefit this group,” Gan Li, director of the Survey and Research Center for China Household Finance at Southwestern University of Finance and Economics, said in an interview with The Paper.
Luo Zhi, a professor of economics from Wuhan University, said she doubted the efficiency of giving out coupons indiscriminately among citizens at all levels of income.
“The goal should be clear. If it is to sustain consumption, the government should directly give money or subsidies to people who have problems maintaining a normal life. If it is to stimulate consumption, coupons could work among people whose lives were not much affected, but the focus should be on more expensive goods instead of daily necessities to produce a better effect,” Luo said.
It will be worse if more people have no disposable income after losing their job or choose to save amid uncertainties about future income. “People only dare to spend when they are sure about future income, and vice versa,” she said.
The unemployment rate rose to 6.2 percent in February, one percentage point higher than the previous quarter, the NBS said. These figures, many observers say, fail to reflect the true impact of the pandemic on the job market given that the unemployment rate is a lagging indicator. The NBS does not count some of the self-employed or the tens of millions of migrant workers from rural areas who are designated as farmers, even though they generally work in urban areas in fields like construction and the services sector. If they are laid off, they are expected to return home and are therefore not counted among the unemployed.
A report published by Zhongtai Securities in April predicted the real unemployment rate to be around 20 percent, meaning an increase of 70 million unemployed.
Wang Tao, an economist from UBS Securities, wrote in an article published on the China Chief Economist Forum, a financial platform for economists to share their views, that the job market is facing its biggest challenge in 20 years. The employed population might decrease by 14 million in 2020 despite a gradual pickup in the coming months, while the net increase was around 10 million in the past five years, she said. “In spite of that, China’s direct subsidies to the jobless population and those with low incomes are relatively limited,” Wang wrote.
The PBoC data shows that yuan savings increased 8.07 trillion yuan (US$1.1t) in the first quarter while household savings rose 6.47 trillion yuan (US$912.2b). In a survey by the PBoC among 20,000 depositors in 50 cities, 27.5 percent said their income had decreased, 15.4 percentage points higher than the previous quarter. Confidence in future income dropped by 7.2 percentage points and more people are inclined to save.
The high levels of household debt may aggravate the situation. A PBoC survey in April shows 56.5 percent of urban households were in debt in 2019, among which mortgages take up 75.9 percent. Indebted households without savings could be deprived of all spending power if they lose their jobs, experts said.
“In stimulating short-term consumption, the livelihood of low-income people should be guaranteed while employment must be stabilized,” Luo said. For the time being, she suggested the government screen companies in difficulty and give “employment subsidies” directly to their employees to keep them on the payroll. “It might help to both ease companies’ burdens and ensure that people stay employed, which will help consumption in the end.”
But to be fair and efficient, the government needs to do a better fundamental job in finding out the real situation, including quantity and financial situations, of small companies, the self-employed and low-income groups, where it is not doing enough, Luo said.