While several Chinese local governments have been issuing consumption vouchers to shore up the coronavirus-hit economy, an official at the country’s top economic planner has told them to take into account their fiscal capacity.

Local governments need to consider how much funding they can afford when rolling out measures to stimulate consumer spending, and to ensure that the measures can bring real benefits to businesses and the public, Ha Zengyou, a department head at the National Development and Reform Commission, told (link in Chinese) a press briefing on Wednesday.

Recently, city governments in Nanjing, Jinan and Ningbo have issued vouchers for residents which can be spent on specific activities such as tourism, entertainment and catering, some of the sectors hit hardest by the epidemic due to travel and other restrictions.

Official data show that China’s retail sales, which include spending by governments, businesses and households, fell 20.5% year-on-year for the two months of January and February, the steepest fall on record. Catering sales plunged by an even larger amount of 43.1%.

Ha said that the consumption shock was relatively substantial in the short run. But as life and production gradually returns to normal, consumer demand will recover soon, he said.

He said the commission supports local governments to take such measures but they have to consider how much local funding they can afford while at the same time ensuring that measures bring real benefits to businesses and people.

Read the full story on Caixin Global later today.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

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