context: As COVID-19 recedes, the economic impact on individuals is starting to show. Beginning with unemployment, a vicious cycle is being created that could drag more people into poverty. Only government assistance can arrest the fall.
A State Council executive meeting on 31 Mar 2020 emphasised the urgency of assisting low income groups, reports National Business Daily. Temporary price subsidies will be doubled, as well as expanding their scope to orphans, de facto uncared for children and qualified unemployed people. The policy will benefit more than 67 million people.
Patients who recovered from COVID-19 and Hubei people are hardest hit, reports Caixin. Many of them are still required to self-quarantine and cannot resume work. Without unemployment insurance, migrant workers stuck at home have no income and cannot pay for their children’s education. Agriculture also took a blow, as many are still concerned about food from Hubei. Many products can only be sold at very low prices. Although central authorities have asked to create safety nets for people in trouble, Caixin notes that implementation is far from sufficient.
Many experts have called for directly distributing cash to low income groups. Gan Li 甘犁 Southwest University of Finance and Economics China Family Finance Survey and Research Centre director says the scope of the current social assistance system benefits is not large enough. He suggests that people not enjoying individual tax cuts and earning less than C¥60,000 per year should receive a one-time subsidy equal to a proportion of their education, healthcare, housing and aged care spending. According to estimates, 167 million people will qualify, and if the proportion is set at 10 percent, each person will receive a subsidy of C¥1,620. Special-purpose bonds could be used to pay for the subsidy, and it will increase consumption by C¥400 bn.