Sieren: Can street vending save jobs in China?

In his attempts to boost China's economy and curb unemployment in the wake of the coronavirus pandemic, Premier Li Keqiang has made a surprising suggestion: revive the street-vending economy. He praised the fact that about 100,000 jobs had been created overnight in Chengdu when 36,000 street stalls were erected.

This development says a lot about how the government is struggling to keep the economy afloat. In recent years, traders who sold food, clothes and other wares on the streets had become increasingly unwelcome in China. They were not considered to fit with the country's more modern image.

Regional authorities had painted street markets chaotic and backwards, accusing them of selling poor-quality goods and lacking satisfactory health and hygiene standards. They were even banned in many cities, and online trade was touted as the future.

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Now, street vendors are to receive state funding as part of the government's attempts to achieve the "centennial goals" pitched in 2017 to put an end to "absolute poverty" and ensure that China is a "moderately prosperous society" by the end of this year. According to the National Bureau of Statistics, more than 740 million people rose from extreme poverty from 1978 through 2017.

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A step back

Dozens of cities — including Changchun, Nanjing and Changsha — have announced plans to promote street vending. Media have encouraged this by running rags-to-riches stories about erstwhile street vendors such Jack Ma, the co-founder of the e-commerce giant Alibaba, who once sold handicrafts to pay the rent. Alibaba and its rival JD.com have promised to boost street vending with a series of microloans.

The return of street vending has been broadly well received, with older generations in particular reminded of the late 1970s and the 1980s, when Chinese leader Deng Xiaoping helped create a market for entrepreneurs and declared that "to get rich is glorious." Street vendors popped up everywhere. There was little to lose and plenty to gain at the time. Now, the population could lose what it has gained.

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If Deng's initiative was a step forward, Li's suggestion is more of a step backward. The idea is to boost consumption, which constitutes 60% of China's GDP. In May, retail sales were down 2.8% compared with the same period last year. Online sales were up however by five percentage points, to 25% of total sales. The middle classes are buying again.

Poorer people in China, however, have been hit hard by the pandemic of the novel coronavirus. At least 600 million people make do with an average monthly income of 1,000 yuan (€125/$140). This does not even cover the rent in a midsize city. According to official figures, unemployment is at 6%, but this does not include the millions of domestic migrants who were forced out of cities and back to the countryside during the pandemic. The situation will be exacerbated by the 8.7 million people who graduate from schools in 2020.

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Focus on poor

China's government must change course. Whereas in recent years it has tended to concentrate on China's middle classes, as they were responsible for economic growth and their growing affluence gave legitimacy to the state's authority, now the government has to turn its attention to impoverished people, who make up 43% of the population and do not have savings to fall back on in these trying times. 

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Reactions to the government's effort to revive street vending have been mixed. The renowned economist Zhou Tianyong estimated that more than 50 million jobs could be created by boosting the street-vending economy around China.

A commentary in the state organ Beijing Daily called street vending unsuitable for the capital because it is "unhygienic and uncivilized," loud and the cause of traffic jams. The state broadcaster China Central Television called street vendors inappropriate for "first-tier cities such as Beijing and Shanghai" and charged that their return represented a regression of several decades — and the reversal of high-quality growth.

National versus regional

Criticism of the official line in the state media is remarkable. It can be attributed to the fact that Beijing and other wealthy cities have taken dramatic steps to modernize in recent years, removing what they considered "eyesores" without taking heed of small traders. The dirty work was often carried out by poorly paid urban management officers known as chengguan, whose brutal methods have earned them unrivaled unpopularity.

In 2017 tens of thousands of migrant workers were driven from cramped housing in Beijing in the name of public safety. These evictions of the "low-end population" triggered ire and shows of solidarity among the population.

If the Beijing authorities change their tune now, they risk losing their credibility and causing a wave of protests at a time when there has been a new outbreak of the novel coronavirus at the Xinfadi wholesale food market in the district of Fengtai. Eleven residential areas are under lock-in.

It is becoming more and more difficult for the authorities to find the right balance between pleasing the new middle classes and addressing the needs of impoverished people, as well as for the government to plan centrally for the long term and to impose its will on increasingly assertive regional authorities. The coronavirus pandemic has made the discrepancies in Chinese society more glaring than ever.