A woman at a community center in the Chinese coastal city of Hangzhou is given a voucher last week to use for shopping. [The New York Times]

Shou Xuejun was a popular man one afternoon early this month. As a finance official in this town of ancient canals and textile factories, he got to hand out shopping vouchers worth nearly $30 apiece to 20 elderly residents.

Since January, more than a fifth of the five million residents of the Hangzhou area have received the same vouchers. Hundreds of thousands more vouchers will be issued soon. Hangzhou officials hope the coupons will stimulate buying and avert the worst of an economic downturn that has eviscerated factory after factory here.

But even Mr Shou, who helps oversee the $100 million program, acknowledges that vouchers will not cure Hangzhou's slump — or China's. The problem is more basic: China's economy thrives on making things that overseas customers want to buy. Chinese consumers tend to be less eager shoppers. Conditioned to save for medical expenses and old age, they sock away more than one-fourth of their incomes — far more than Westerners, especially Americans.

"People do not dare to spend more because of the underdevelopment of the social welfare system," Shou said. "That problem cannot be solved in the short term."

China's leaders have talked for years about the need to create a social safety net that would ease the financial pressure on average Chinese and make consumer demand and the service sector a bigger source of growth. Now that exports are slowing in the face of a global economic crisis, many economists say, it is past time for action.

Despite recent increases in social spending, especially on education, the government has mostly concentrated on building up industry and infrastructure, subsidizing a host of manufacturing costs. That economic model has delivered world-beating growth for three decades and lifted hundreds of millions out of poverty.

Chinese consumers have played a comparatively small part. Their spending accounts for just 35 percent of China's GDP, compared with more than two-thirds for consumers in the United States.

Chinese Premier Wen Jiabao said this month that China must make domestic demand "a basic point of departure for stimulating economic growth". But weaving a social safety net that gives average Chinese the confidence to loosen their purse strings would take years. Meanwhile, the overseas consumer is in full flight: In February, exports fell by a record 25.7 percent. Some economists warn that exports might not revive until next year.

China's leaders are trying to save and create jobs with a $586 billion stimulus plan tilted heavily toward infrastructure. Outside economists say they hope the money goes to build schools or low-cost housing for migrant families, rather than more highways and seaports to benefit industry.

The government has also pledged more social spending, led by a $123 billion three-year initiative to deliver basic, universal health care and health insurance to 9 in 10 Chinese. That follows a three-year drive to provide compulsory, free education to students through ninth grade.

"This is step one of a 100-step process, but it is a very important step," Arthur Kroeber, managing director of Dragonomics, a Beijing-based economic research firm, said of the health care plan. "There is political will, and they are putting real money on the table at a time when it is not easy to do so."

But in a January meeting with Finance Ministry officials, outside economists argued that the government should do more now to protect the vulnerable. "The government could afford to expand all these programs quickly," David Dollar, the World Bank's country director, wrote in a report on the bank's website describing the meeting.

"They really need a sweeping program to set up social security," said Fred Hu, a Goldman Sachs economist who has advised the government on policy. "That hasn't happened. It's still piecemeal measures."

The coastal city of Hangzhou, just south of Shanghai, has been hit less hard than some cities in China's manufacturing belt. Still, officials say industrial output has shrunk since late last year, and migrant-worker centers are packed with job seekers.

Wang Pengfei, 21, was one of hundreds in Hangzhou hoping to find work. Until December 2008, he helped fill orders for the Hangzhou Donghua Chain Group Company, which makes chains for conveyor belts, tractors, motorcycles and other machinery. Michael Xiao, that company's head of exports, said that Donghua normally exported four-fifths of its production. Now those orders have fallen by 50 or 60 percent. In December, the factory laid off 500 of its 3,000 workers.

Hangzhou officials are hoping to soften such blows by giving vouchers to everyone from middle school students to tourists. Some vouchers are aimed at the needy, including laid-off workers; others are more broadly directed toward consumers in the hope of spurring spending.

A red and yellow banner stretched above the doors to Century Mart, a supermarket, announces: "Welcome, shoppers. Come to our store and spend your voucher."

"I would buy this anyway, but this relieves our burden," said Zhang Beili, a 62-year-old retired government worker, as she cashed a $3 voucher to buy snacks and soft drinks.

Although some other Chinese cities are also experimenting with vouchers, government officials said there was no plan now to expand the program nationwide. Many economists question whether vouchers can revive consumption, saying many recipients may use them instead of spending cash, not in addition.

However, at the least, Mr Shou said, the city is sending a message to its citizens to “have confidence” and spend.