Source | Li Xunlei Finance and Investment (ID: lixunlei0722)
Author | Li Xunlei Yang Chang
On February 23rd, we released the report "How to Promote Replenishment of Consumption in Epidemic Situation: Issuing Consumption Vouchers". Over the past month, several provinces and municipalities have adopted this policy in succession. Consumer vouchers can stimulate consumption, drive supply to increase, and then increase income, which can counteract consumption and re-form a virtuous circle of consumption replenishment. Consumer vouchers are not original tools, but relatively mature practices. At the same time, they can also be used as tools for social relief, and the experience is very mature. With the epidemic situation under full control, the next step is to issue consumer vouchers at the national level to further promote consumer replenishment and release consumer potential.
【The main points】
1. The short-term consumption coupons are mainly issued by local governments, and will continue to expand the scope of issuance in the future.
2. The leverage effect of consumer vouchers on the retail sales of social consumer goods (hereinafter referred to as social zero) is about 15 times, with an average increase of about 10 percentage points.
3. The main beneficiary industries are concentrated in the fields of essential consumer goods and service consumption.
4. Issuing consumer vouchers at the national level is not impossible, and the national financial resources are fully affordable.
5. It is recommended to issue consumer vouchers to the general public, and it is not recommended to distinguish them according to different income levels of residents.
01 Current status and logic of issuing coupons
China ’s Hong Kong and Macau regions have a history of issuing cash and consumer coupons. For example, Hong Kong issues 10,000 Hong Kong dollars to permanent residents aged 18 or above, while Macau issues 3,000 MOP electronic vouchers. For the direct cash distribution, the mainland may not be effective. If residents have pessimistic expectations about the future economy, they may directly issue cash savings without spending.
Many provinces and cities in China have issued consumer vouchers in the early stage, and other cities such as Nanjing have issued electronic consumer vouchers, which is relatively mature.
Distribution of consumer vouchers in some provinces and cities
Source: Public information collation, Zhongtai Securities Research Institute
By adopting the method of consumption vouchers, it is possible to expand the consumption of necessities and services of residents in areas severely affected by the epidemic. At this stage, the consumption vouchers issued by local governments in various provinces and cities are essentially leveraged by local governments.
Under normal circumstances, if there is no impact of the epidemic, local governments are more willing to invest after borrowing and leverage, because investment is often more "productive" and forms capital and physical objects. For example, through the local government's special debt, to promote investment in infrastructure construction, or use policy financial loans to promote the transformation of old communities. In the case of economic stalls and sharp declines in demand, the use of consumer vouchers has been selected to promote consumption replenishment and potential release. The main reason is that compared with investment, consumption has a faster effect, can drive consumption as soon as possible, activate the market, and promote the flow of people and Logistics and other liquidity.
02 Consumer coupons have an obvious lever prying action-take Hangzhou as an example
The actual effect of issuing consumer vouchers is a matter of general concern. What is the actual effect? Take Hangzhou after the subprime mortgage crisis as an example. Since January 2009, Hangzhou has issued two phases of consumer coupons, totaling 1.05 billion yuan. Before issuing consumer vouchers, the impact of the 2008 international financial crisis on zero consumption in Hangzhou was significantly greater than the national average. However, after the issuance of consumer vouchers in January 2009, the zero growth rate of the Hangzhou Society has rebounded very quickly.
After the issuance of consumer vouchers, the zero growth rate of Hangzhou's society exceeded the national level
Source: WIND, Zhongtai Securities Research Institute
What is the actual prying action after the coupon is issued? The calculation of leverage is required. For this reason, Nanjing was chosen as the benchmark for comparison, because both Hangzhou and Nanjing are in the Yangtze River Delta region and are the capital cities of their respective provinces. In 2009, the nominal value of the total zero value of Hangzhou and Nanjing was very close.
Hangzhou and Nanjing's total social zero trend in 2009
Source: WIND, Zhongtai Securities Research Institute
Observing from the trend of the nominal value of the total value of the company zero in Hangzhou and Nanjing in 2009, it can be found that Nanjing company zero exhibits the characteristics of interval fluctuations, and the overall increase is relatively low, but Hangzhou has shown a clear upward recovery trend. If the chain growth rate of the nominal value of the total value of the Nanjing Society is used as the base growth rate, which is used to estimate the situation of Hangzhou not using consumer coupons, the actual effect after the consumer coupons are issued can be compared.
The Estimation of the Effect of Consumer Vouchers on the Nominal Value of Hangzhou Total
Source: WIND, Zhongtai Securities Research Institute
According to estimates, due to the issuance of 1 billion yuan of consumer vouchers, the nominal value of total zero society in Hangzhou increased by about 15.5 billion yuan in 2009, that is, the actual leverage factor reached 15 times. If you consider that in the consumption process, for example, you need to pay part of the tax for the purchase of various items, the final financial investment may be less than 1 billion yuan, then the actual leverage ratio may be higher than 15 times.
At the same time, in the end, how much can the consumer coupons increase the nominal growth rate of the society's zero total? Similarly, Nanjing is used as a comparative benchmark to reverse Hangzhou. If consumer coupons are not issued, the zero growth rate of Hangzhou may also show the characteristics of low fluctuations. Due to the use of consumer vouchers, the nominal growth rate of Hangzhou ’s nominal total zero has seen a significant year-on-year increase, with a minimum increase of 5% and a maximum of 22%. The leading role of the year-on-year growth rate is also very obvious.
The average consumption voucher has increased the total value of Hangzhou ’s total zero society by 10 percentage points year-on-year
Source: WIND, Zhongtai Securities Research Institute
03 Is it feasible to issue consumer vouchers at the national level?
The controversy over the issuance of consumer vouchers at the national level may be focused on two issues: First, will it put pressure on the central finance? In particular, due to the epidemic situation, fiscal revenue has dropped significantly, and under the background of significantly increased expenditure, will the issuance of consumer coupons significantly increase the deficit rate? Second, is the object of issuing consumer coupons universal or universal?
First of all, we set the quota for the consumption of consumer vouchers at the national level to be between 240-360 billion yuan, so the issuance of consumer vouchers will not exert excessive pressure on the finance.
It is assumed that consumer coupons are issued electronically through Alipay or WeChat, rather than in the form of physical coupons. According to data released by Alipay, Alipay's global users exceeded 1 billion in 2019. On this basis, a distribution interval of 800 million to 1.2 billion times was designed.
If the consumer voucher is designed to stimulate consumption, the consumer voucher can be taken multiple times by a single person instead of being restricted to one person at a time. Estimate according to the range of each denomination of 100 to 300 yuan. Even if it is issued according to 1.2 billion times, the average amount is 300 yuan (it can be divided into multiple times, a total of 300 yuan), the occupied financial funds are 360 billion yuan.
According to the calculation of GDP close to one trillion in 2019, the deficit rate will be increased by at most 0.36 percentage points. If the tax generated in the consumption process is taken into consideration again, the fiscal pressure caused by the consumption voucher should be affordable.
Capital calculation of issuing consumer vouchers nationwide
Source: Zhongtai Securities Research Institute
Secondly, how much prying effect will the distribution of consumer coupons have on social zero? Assuming that the year-on-year growth rate of total retail sales of social consumer goods in 2020 is 5.7 percentage points lower than that in 2019 (refer to the drop in 2009 compared with 2008), then the year-on-year growth rate of total retail sales of social consumer goods in 2020 is 2.3%. Combined with the base of total social zero in 2019, without the issuance of consumer coupons, the total amount of social zero in 2020 will be approximately 42 trillion.
If 360 billion yuan of consumption coupons are issued, and estimated according to the leverage range of 10-15 times, then 3.6-5.4 trillion yuan of consumption can be increased, which will have an upward effect on the year-on-year growth rate of total social zero; In terms of coupons, it is also possible that the nominal annual growth rate of total social zero will reach more than 8% year-on-year.
The effect of issuing consumer vouchers nationwide on social zero
Source: Zhongtai Securities Research Institute
Third, whether to issue specific coupons to distinguish specific groups. It should not be a core issue. In the short term, stimulating consumption is the core purpose. The distribution of universal inclusiveness is more important to ensure a certain breadth and breadth. For low- and middle-income groups whose income has been severely reduced by the impact of the epidemic, they can try a way similar to the US food stamps for long-term social relief.
In fact, in the past, China has accumulated rich experience in reducing the absolute poverty population in the battle against poverty, and it is no longer necessary to supplement the poverty alleviation with consumer coupons.
