Local Chinese government stimulus pushes big spenders to dig in while dining out

A local government in China’s provincial economic powerhouse of Zhejiang has announced plans to subsidise the restaurant meals of high-value consumers, in a move that is intended to stimulate consumption but could raise questions about whether it runs contrary to the central government’s austerity drive.

Shaoxing – a city known for its textile industry and a prized variety of cooking wine – will offer subsidies of up to 5,000 yuan (US$700) to banquet holders if they host five or more tables and spend more than 10,000 yuan, as part of a series of consumption-boosting policies unveiled at a press conference by the municipal government on Tuesday.

The measure came as some local officials have found themselves caught between an urgency to encourage spending amid strained economic growth and an emphasis from leadership on limiting extravagant practices amid Beijing’s anticorruption campaign.

“Vigorously boosting and expanding consumption is a top priority at the national, provincial and municipal levels, essential for stable economic growth and meeting public demand for a better life,” Jin Yi, party secretary of the Shaoxing Development and Reform Commission, said at Tuesday’s conference.

He said Shaoxing’s new measures were expected to bring in an additional 178 million yuan (US$24.5 million) in funding this year by getting consumers to open their wallets across multiple sectors, and catering is a focal point alongside cars, housing and retail.

The policy announcement followed last week’s re-emphasis by President Xi Jinping of the need to implement the Communist Party’s eight-point set of austerity rules to maintain party discipline, including by practising diligence and frugality.

In a party meeting on Friday, Xi urged officials to uphold the regulations, noting their role in maintaining party discipline and public trust through rigorous implementation, Xinhua reported.

South China Morning Post