Chinese City Launches Banquet Subsidy to Ignite Consumer Spending in Shaoxing

In a bid to stimulate consumer demand and uphold ambitious economic growth targets, the Chinese city of Shaoxing—renowned for its iconic cooking wine—has unveiled a novel subsidy scheme inspired by the UKs Eat Out to Help Out initiative. Locals are being offered payments of up to 5000 renminbi, equivalent to around £520, for hosting lavish banquets in restaurants if their booking covers five or more tables and accrues a bill exceeding 10000 renminbi. This effort is designed to boost restaurant and hospitality sectors that have recently suffered under anti-corruption measures targeting extravagant official banquets.

Authorities in Shaoxing, a lakeside city housing some 5.2 million residents, are acting as consumer confidence across China struggles to recover. Senior local party officials stress that driving and expanding consumption ranks among the top national and regional priorities, given that robust consumer activity is seen as essential for stable economic growth and improving living standards. As part of the wider campaign, Shaoxing is also distributing 500 renminbi vouchers to visiting university students, valid across restaurants, hotels and supermarkets, with total funds allocated for local voucher handouts topping 100 million renminbi.

This city policy aligns closely with Beijings national push to lift household spending. In recent months, the central government has invested close to £30bn in trade-in schemes to encourage upgrades of household appliances and electronics, which briefly stimulated retail sales before momentum faded. Despite these incentives, Chinas consumer confidence index has remained stagnant throughout the year.

Recent independent data suggest the Chinese economy grew at an annual rate of 3.6 percent in July, a modest improvement from the previous month but still trailing the governments official target of just over 5 percent GDP growth for the first half of the year. This performance occurs against a backdrop of a softening labour market and the lingering impact of the 2021 property downturn, which left many households feeling financially insecure. Falling house prices in July underscored these pressures.

Beijing looks to consumer spending to offset potential setbacks from international trade frictions, especially as fears grow over the impact of a renewed trade war. Government stimulus for manufacturers has created gluts in industries such as electric vehicles and solar panels, triggering aggressive price competition. Now local administrations like Shaoxing are increasingly experimenting with direct subsidies to ordinary citizens and specific sectors to ignite demand from the ground up.

While public officials are being reminded to practise strict austerity and avoid flashy or wasteful spending, these restrictions have inadvertently dampened the same banquet and catering businesses that Shaoxing aims to revive. The citys targeted subsidies thus stand in stark contrast to the ongoing frugality drive among bureaucrats, providing a timely financial shot in the arm for the hospitality trade and signalling a pragmatic approach to local economic management.