Bloomberg Businessweek - USA (2020-11-16)

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China has become almost free of

Covid-19.Itssuccessresultspartlyfrom

draconianquarantines.Andit isn’tlet-

tingitsguarddown.Thecapitalcity

ofBeijing,forinstance,addedrestric-

tionsjustsixweeksafterresuminginter-

nationalflights inearly September.

Travelersfromoverseasmustnowbe

testedthreetimes,insteadoftwice.

Theyalsohavetospendtwoweeksiso-

latedina hotelchosenbythegovern-

ment.Someroomscanbequitedingy.

Thislackofhumantouchnaturally

turnsforeignersaway.ButChinesewhowanttotravel

abroadhavesecondthoughts,too.Whowantstobe

enclosedina tinyroomuponreturninghome?

ThemovesarepartofChina’snewstrategytostimulate

theeconomy.Lastyearroughly 170 millionChinesetraveled

outofthemainland,splashingabout$220billionabroad.

Thatmoneycan,intheory,bespentathomeinstead.

Althoughwagegrowthhasrecoveredtoabout70%of

pre-pandemiclevels,thenovelcoronavirushasleftlasting

economicdamage.Peoplearemorecautious,withsavings

rising13.9%inSeptemberfromthesamemontha yearago,

higher than the average 10.4% growth rate in the previous

two years, data from HSBC Holdings Plc show. No surprise,

retail sales that month grew 3.3%, less than in the past, too.

The pandemic has encouraged Chinese households to save

more, because they don’t have much of a social safety net

to get them through hard times.

Chinese tourists often spend heavily on luxury goods

whentheytravelabroad.Now that

fewerareventuringbeyondthecoun-

try’sborders,thegovernmentsand

retailersarecomingupwithallsorts

ofgimmickstocoaxpeopletospendat

home.JackMa’sAlibabaGroupHolding

Ltd.expandeditsannualSingles’Day

shoppingextravaganza,offeringtwo

checkout periods with special dis-

counts:a newoneinthefirstthreedays

ofthismonthanditstraditional24-hour

shoppingwindowonNov.11.

Municipalgovernmentshavebeen

handingoutbillionsofyuaninshoppingvouchers,often

toberedeemedinphysicalstoresonly.Peoplewhogoout

tolookaround,say,inelectronicsshops,mighteatoutin

nearbyrestaurantsaswell,thethinkinggoes.Unlikegoods

purchases,cateringpurchasesarestillshrinking.

OnJuly 1,Chinaraisedthecaponduty-freeshop-

pingfortravelersinHainan—knownasChina’sHawaii—to

100,000yuan($15,000).Theimpactwasimmediate:Inthe

thirdquarter,theisland’sduty-freesalesrose230%froma

yearearlier,withthebulkofthepurchasesinluxurycate-

goriessuchascosmetics,jewelry,andwatches.

With Covid-19 flaring up again in the U.S. and Europe,

it makes sense for China to discourage nonessential for-

eign travel. But there is a financial motivation as well. By

forcing travelers to quarantine in shabby rooms on their

return, China is trying to keep its citizens, as well as their

wallets, inside the country. <BW> �Ren is a columnist for

ILLUSTRATION BY GEORGE WYLESOL Bloomberg Opinion

By Shuli Ren

China’s Plan to Keep Its

Citizens Spending

◼ LAST THING

With Bloomberg Opinion

Bloomberg Businessweek

(USPS 080 900) November 16, 2020 (ISSN 0007-7135) H Issue no. 4678 Published weekly, except one week in January, February, March, May, July, August, September, October, November and December by

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