China Briefing | Coronavirus: why Xi should do a Trump and hand out cash to cooped-up Chinese
- Beijing appears to be relying on its usual method of boosting infrastructure to offset the economic gloom caused by the coronavirus
- But it could boost both consumption and confidence – and help meet Xi’s poverty goals – by putting serious money in the hands of Chinese people
Hailed as the biggest rescue package in US history, the bill – passed by the Senate last week and in the process of getting the nod from the House of Representatives – promises not only generous loans and grants to major industries and small businesses but also direct cash handouts to most adults who will receive US$1,200 per person and US$3,400 per family of four.
As a result, global stock markets rallied last week, with the Dow Jones index rebounding by 11 per cent on Tuesday, the biggest one-day percentage gain since 1933.
An increasing number of cities, including Shenzhen, Nanjing and Ningbo, have decided to take matters into their own hands by announcing they will issue cash vouchers to encourage residents to dine out, watch movies, buy books and join local sightseeing tours.
But because of budget constraints, those cities’ voucher schemes are more like the gimmicks or marketing promotions of more normal times than genuine efforts to stimulate consumption in a time of crisis, when compared to their promises to spend hundreds of billions of yuan on infrastructure investments.
