Can ‘peanuts’ save Shanghai’s Covid-ravaged retail sales and economy?

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The municipal government is dangling 1 billion yuan (US$140.5 million) in e-coupons via a lottery system to help revive consumer spending

Shanghai’s economy shrank 5.7 per cent in the first six months and is likely to end with zero growth for the year, versus an earlier target of 5.5 per cent expansion

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Visitors walk through the Yuyuan Garden in Shanghai on October 2. Photo: Bloomberg

Daniel Renin Shanghai

Published: 12:30pm, 4 Oct 2022Updated: 12:36pm, 4 Oct 2022

Shanghai, China’s primary commercial and financial hub, is banking on an electronic shopping coupon lottery to revive consumer spending and reclaim its pride as the mainland’s key economic growth engine.

The municipal government is pinning hopes on 1 billion yuan (US$140.5 million) worth of retail vouchers to encourage its 25 million residents to buy goods and services. The coupons will be doled out in a lottery system in three rounds through November, it announced in August.

The size of the handout, while small relative to the local economy, represents an attempt to spark life into the city’s retailing industry. A two-month lockdown in April and May under Beijing’s strict zero-Covid policy, rattled confidence and turned big spenders into budget-conscious consumers amid losses in job and stock markets.

“The amount of subsidy has just symbolic value, but it is a clear sign that the mainland’s commercial hub is desperate to spur consumption,” said Chen Xiao, chief executive of Shanghai Yacheng Culture, a firm that deals with marketing and branding for retail companies. “Virus-control measures have already damaged thousands of retailers and restaurants. The ‘peanut’ incentive has buoyed spending sentiment to some extent.”

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Shanghai residents aged above 18 can enter the lottery through online payment platforms such as UnionPay, WeChat Pay, and Alipay. The e-coupons offer a discount of as much as 100 yuan on a commercial transaction. The city’s government will reimburse the participating retailers.