Red envelopes still in demand ahead of Year of the Monkey

Despite slowing economic growth, Chinese New Year is a major cash-fest.

The country’s central bank, the People’s Bank of China, has been adding administrative orders to its toolbox to calm money markets, with record capital outflows and booming cash demand before Year of the Monkey celebrations.

The last thing you want is the ATM cash machines running dry at a time when Chinese people are crowding out the restaurants and buying dumplings and baijiu liquor.

Despite somewhat downbeat prognoses for the economy, some traditions do not change, although the manner in which they are carried out does.

Traditionally at Lunar New Year, Chinese people give out cash gifts in red envelopes to children, parents and relatives aimed at bringing good luck – and, of course, warding off evil.

This year, desperately competitive online companies such as Baidu, Alibaba and Tencent are giving away billions of yuan with electronic hong bao, or red envelopes, as they try to gain the upper hand in the country's booming mobile payments market.

Ant Financial Services Group, the internet finance arm of Alibaba, is giving out hundreds of millions of yuan through its Alipay Wallet apps on February 7th, the eve of the festival.

Consumers who pick up five virtual lucky cards, which can be found in the virtual red envelopes, can also share the grand prize of 200 million yuan (€28 million).

Li Chao, an analyst at internet consultancy iResearch Consulting Group in Beijing, told the Xinhua news agency: "Giving out red envelopes is a nationwide tradition that can involve consumers in major cities and small towns, so it makes sense for internet companies to sink significant investments into this."