Chinese people are among the world's most determined savers, with economists estimating they put away 30 to 40 per cent of their disposable income, but a virtue can be an obstacle when trying to jump-start the economy.

So while multi-billion-dollar spending programmes on infrastructure projects and interest rate cuts have stolen the headlines in China in recent months, the humble coupon has quietly emerged as another popular stimulus weapon.

Chengdu, the capital of quake-hit Sichuan province, was one of the early coupon pioneers, giving more than 379,000 low-income residents nearly 39 million yuan worth of vouchers in December.

The eastern city of Hangzhou also last month gave 670,000 low-income residents 100 million yuan (S$22.3 million) in vouchers to spend in shops and entertainment centres.

Poor families and retired people in Hangzhou were given ten 20-yuan coupons to spend in shopping centres while students received five 20-yuan coupons. They were encouraged to use them within three months, after which point they can be used, but at fewer stores.

Hangzhou - famous for the scenic views of its West Lake - is also giving residents in neighbouring provinces and cities, including Shanghai, 40 million yuan worth of coupons to spend at its hotels, resorts and restaurants.

The Hangzhou government is even considering paying its employees up to a tenth of their salaries in coupons, according to the government's website.

The efforts to boost consumption come as the global financial crisis has hammered consumer confidence in China down to its lowest level in six years.

A confidence index compiled by China-based research group Horizon stood at 59.9 at the end of 2008, a decline of 4.5 points from September, state media reported. The last time it sank that low was after the outbreak of Severe Acute Respiratory Syndrome, or SARS, in 2003.

It is too soon to gauge the coupons' impact. The latest retail sales figures show 290 billion yuan was spent nationwide during the week-long Lunar New Year holiday. That was up 13.8 per cent from the same period last year, but growth had slowed down from 16 per cent in 2008.

Coupons can only be effective for a short time, cautioned Shi Jianxun, an economist with Shanghai's Tongji University.

'After cash coupons are given out, you have a one-off stimulus. As people use up coupons, you have to give out more each month to sustain the boosting effect,' he said. For a lasting solution, China has to resolve imbalances that have led to urban incomes growing on average at a third of the rate of government revenues, with rural incomes lagging even further behind, Shi said.

A woefully inadequate social safety net, meaning people especially in rural areas have to save as much as they can to pay for life in their old age and health care, is one of the big problems.

'China should revamp its national income structure and change the situation of 'rich nation poor citizens' by collecting less taxes and improving social security,' Mr Shi said. 'Then people would not have save so much.' - AFP