Can street vendors save China from a labor crisis? Beijing seems divided

06/29/2020 Business, Science, Technology, World

It began to gain strength last month when Chinese Prime Minister Li Keqiang, the second-highest-ranking official in China after President Xi Jinping, praised the city of Chengdu. for creating 100,000 jobs overnight by installing tens of thousands of street stalls, which typically sell food, fresh vegetables, clothing and toys.

The government needs to do more to create new jobs “by breaking stereotypes,” Li said during a major annual political meeting in Beijing. “China has a 900 million workforce. Without jobs, there are 900 million mouths that need to be fed. With jobs, there are 900 million pairs of hands that can create enormous wealth.”

The suggestion that street vendors could be the answer to China’s unemployment problem was not limited to Li’s comments at the meeting. The “mobile vendors” were also mentioned in their annual government work report, which outlines Beijing’s priorities for the year, for the first time since he took office seven years ago. Li continued to praise the street vendors after the meeting during a visit to eastern Shandong province.

Li’s message comes at a stressful time for the world’s second-largest economy. From January to March, China’s GDP contracted for the first time in decades. The unemployment rate has also worsened since the coronavirus pandemic began, and the unofficial analysis suggests that as many as 80 million people may have been out of work this spring. Before the outbreak, authorities said they needed to create about 11 million new jobs each year to keep jobs on the right track.

But the reaction to Li’s speech in the Chinese state media was swift and fierce. The influx of street vendors in major cities would be “uncivilized,” wrote state television channel CCTV in a comment posted online earlier this month. He criticized the idea, not to mention the prime minister, as “going back overnight several decades ago.”

And Beijing Daily, the official newspaper of the city government, published several articles that criticized the street vendors as noisy, obstructive and capable of tarnishing “the image of the capital city and the image of the nation.”

Chinese travelers buy their breakfast from a street vendor at the Chunghow train station in 1975. Prime Minister Li Keqiang has suggested that more street vendors could help solve an impending labor crisis.

The push for technology

The idea of vendors flooding the streets of high-tech metropolises like Shanghai and Shenzhen caused controversy in China, in part because Beijing has spent years cultivating the country’s image as an advanced global superpower. Xi The draft signature policy, “Made in China 2025,” has pushed the country to compete with the United States for influence through billions of dollars in investments in the technologies of the future.

“Street vending is something that Xi does not like as it tarnishes the image of the successful and beautiful China that he likes to project,” said Professor Steve Tsang, director of the SOAS China Institute at the School of Oriental and African Studies in the University of London.

Xi himself in recent weeks has reiterated his longstanding push for high-tech solutions to China’s economic problems. It has recently asked the country to invest in 5G networks and next-generation satellites as part of a plan to boost economic growth and jobs.

“Efforts must be made to promote innovation in science and technology and accelerate the development of strategic emerging industries,” Xi said last month during a meeting with political advisers, according to state broadcaster CGTN.

The smartphones are displayed in a Huawei store before it opens in Shanghai this month.

A harsh political reality

But Xiaobo Lü, political science professor Ann Whitney Olin at Barnard College, said Li’s idea has some merit. China has set itself the goal of eliminating poverty by the end of this year, and Lü noted that peddling and other modest jobs is where people living just above the poverty line can “find ways to survive.”

Furthermore, he said, it may not be as effective as it was before Beijing implemented large and expensive infrastructure projects as a way to address its economic problems.

China’s response to its latest major economic shock, the 2008-2009 global financial crisis, involved heavy investment in high-speed roads, airports, and rail lines. This time, that stimulus line has already been saturated.

“In many ways, even measured by tenure per capita, China has achieved world-leading status” in infrastructure, wrote Zhu Ning, a professor of finance at Shanghai Jiao Tong University and a faculty member at Yale University, in an investigative report earlier this year. . “Therefore, its need for infrastructure has changed a lot compared to 2008.”

The latest financial crisis also left China in deep debt, making it important for the country to focus this time on private consumption, Zhu added.

Tang Min, an adviser to the Chinese government, recently told reporters in Beijing that the hawkering would not only create jobs but also address public concern about overcrowding in the interior amid the ongoing pandemic.

“But it cannot replace the ‘regular’ economy: what can be sold or bought on the streets is very limited,” Tang said. “The government cannot let it grow out of control, it has to be regulated as we continue to experiment and explore this option.”

During May’s annual political meeting, Li was frank about China’s problems and the extent to which some people may not be able to participate in the country’s high-tech future. Some 600 million Chinese, about 40% of the population, earn an average of only 1,000 yuan ($ 141) per month.

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That makes street vendors work as a “key source of employment,” Li said during his visit to Shandong province this month, adding that such jobs make China “live” as much as high-end industries do. A state media news report suggested that lifting restrictions on street stalls, such as allowing business on the roads in urban areas, could lead to the creation of up to 50 million new jobs.

“Li is trying to tackle pressing problems with a … realistic approach” said Willy Lam, an adjunct professor at the China Studies Center of the Chinese University of Hong Kong. While the street vendor approach may not be perfect, he said, there may not be a better alternative for creating many jobs in a short period of time.

“Employment is an extremely important issue that can trigger political turmoil … Li appears to be concerned about the disastrous result of the massive job loss.”

A Uyghur man sells traditional flatbread to women shopping on Beijing's Xinjiang Street in 1999.

Tsang, director of the SOAS China Institute, said Li is likely only trying to do his job of overseeing the country’s key economic policies.

“The pandemic had resulted in him being allowed to play more of the prime minister’s well-established role in managing the economy, something that deviated most of the time in the Xi era,” said Tsang. “He saw how the economic impact of Covid-19 would require a pragmatic and more emphatic approach, thus allowing, even encouraging, street vending for those laid off as a result of the pandemic.”

Local governments keep going

Public discussion of Li’s push for street vendors in China has waned in recent days as major cities, including Beijing and Shenzhen, make it clear that politics is not welcome there.

But other local governments in less prosperous regions are quietly pushing the idea. Lanzhou, the capital of northwest Gansu province, on Tuesday announced plans to establish about 11,000 street vendor stalls, a plan that it hopes to create at least 300,000 jobs.

Changchun, the capital of northeast Jilin province, has also promoted the idea. The head of the province’s Communist Party visited street food stalls in Changchun earlier this month and praised the business for having a “low barrier to entry” for people who simply want to find a job, according to the Jilin provincial government. .

“The street stalls will not totally disappear in reality,” said Lam, a professor at the Chinese University of Hong Kong. He hoped that local governments would go ahead with the plan as long as unemployment remains a top concern.

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