China’s measures to boost consumer demand are nowhere near enough

In a bid to give its struggling economy a boost, numerous Chinese cities and provinces have in recent days taken measures to boost consumer demand with consumption vouchers, spending subsidies, and limited cash handouts.

That’s a welcome start. Beijing has long been reluctant to use demand-side policies despite prominent economists urging the state to literally hand out money to citizens. Instead, policymakers prefer supply-side measures like tax cuts, interest rate cuts, and infrastructure investment.

But the latest moves to boost consumer demand, including handing out consumption vouchers and distributing free digital yuan, are mere drops in China’s vast economic bucket.

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