HONG KONG (CNN) In 2020, as China was in the midst of a pandemic-related economic downturn, Premier Li Keqiang floated the idea of creating jobs by encouraging street vendors to set up shop across the country. This proposal was quickly dismissed by those close to Chinese leader Xi Jinping, who called the traditional trade “unsanitary and uncivilized.”
Just three years later, the tide has turned.
In a major policy reversal, the “hawker economy” is making a comeback, with many cities lifting restrictions on street vendors and encouraging unemployed youth to set up outdoor stalls in a bid to revitalize the economy and boost employment.
Shenzhen, China’s high-tech hub and third-richest city, announced last week that it would lift a blanket ban on street vendors, allowing them to operate in certain areas from early September.
It joins a list of major cities that have eased restrictions this year, including Shanghai, Hangzhou and Beijing, after years of campaigns against street vending, sometimes violent. The city government encourages people to set up street stalls or carts in certain areas where they can sell local specialties, snacks, clothes or toys.
Analysts see the current easing as a desperate move by the government as urban unemployment has risen to worrying levels after three years of pandemic restrictions hitting small businesses hard. A regulatory crackdown has also wiped out tens of thousands of jobs in the education and technology industries.
People queue to buy snacks at a night market in Nanning, China’s Guangxi Zhuang Autonomous Region, June 13, 2022.
“It looks like the Chinese leadership can’t think of a better way to create jobs and thus maintain stability and order than to encourage young people to become street vendors,” said Steve Tsang, director of the SOAS China Institute at the SOAS University of London.
“For workers or graduates with digital age skills, taking on street vending is more a sign of desperation than creative thinking.”
The urban unemployment rate for 16-24 year olds hit 19.6% in March, the second highest on record. That equates to about 11 million unemployed youth in cities and towns, according to CNN calculations based on the latest government data.
The number could rise even further as 11.6 million college students are expected to graduate this year.
May 1959: Customers buy fresh vegetables at a market in Beijing (Peking), capital of China.
viral success
The lifting of restrictions came after a little-known factory town with its outdoor grill stands became a viral sensation, inspiring other cities to try to copy its success.
Located in the eastern province of Shandong, Zibo is currently China’s most popular travel destination. His popularity exploded in March after videos of his cheap grill went viral on social media.
Its main specialty is grilled skewers of meat, hot over open charcoal fires, served with flatbread and local slivers of leek. In addition to cheap dining options — a meal can cost as little as 30 yuan (US$4.2) per person — the city is known for its hospitality.
“The food is very cheap,” said Jiang Yaru, a Zibo local who currently works in Shanghai. She went home during the May Day holiday last week just to “try the barbecue and join in the fun.”
The grill restaurants she visited were all full of people, including many young people.
“Local people are very hospitable and honest to strangers, which I think is one of the main reasons [why the city is so hot]”For many visitors, this is a novel experience as they may not have been treated well in other tourist cities,” she told CNN.
Aerial photo taken on May 8, 2023 shows people enjoying Zibo-style barbecue in the city.
So many tourists flocked to Zibo, now dubbed China’s outdoor grilling capital, that even local tourism authorities urged visitors to go elsewhere. Thanks to the hype, the grim factory town saw GDP growth of 4.7% in the first quarter, which was mainly boosted by retail, tourism and restaurants. Consumption rose 11% over the same period, reversing a 2% decline in the first two months of the year.
The city’s nighttime transformation from an industrial backlog to a must-see destination has stunned the country. Several local governments have sent officials to study in Zibo the locals and try to repeat their success.
So, can the “standstill economy” fuel the country’s transition to an elusive, consumer-centric growth model?
“It seems to me that Zibo made a virtue out of necessity,” Tsang said. “Its success may reflect the effectiveness of a ‘novelty’, but it’s also a sign that people are feeling poorer. Who really prefers street food to a Michelin-star restaurant when you can afford the latter? Some like it, but most don’t.”
A shopkeeper presents grilled meats during a barbecue festival in Zibo, east China, April 29, 2023. The city of Zibo became a tourist hotspot after videos of their barbecue went viral on the internet.
“Catching Lightning in a Bottle”
Zibo’s popularity suggests that people are keen on travel and new experiences but are watching their wallets as China’s economic recovery appears to be patchy.
“The Zibo phenomenon is a combination of FOMO [fear of missing out] between Chinese municipalities and top-down pressures [Communist Party] to combat unemployment and youth anxiety,” said Craig Singleton, senior fellow at the Washington-based Foundation for Defense of Democracies.
China’s economy faces a growing number of challenges. The major real estate market is in its worst downturn on record. Business confidence has plummeted after Xi launched a regulatory attack on the tech and education industries. Global companies have been rocked by raids on international consulting firms.
Foreign investment in China has plummeted. And US-China relations are at their lowest in decades, leading to escalating tensions over technology and investment.
The deteriorating economic outlook has prompted leaders to adopt a more conciliatory tone towards private companies and small and medium-sized enterprises, which contribute more than 60% of China’s GDP and over 80% of employment.
Luo Wen, head of the State Market Regulatory Agency, the country’s market regulator, last month offered more support for “sole proprietorships” like street vendors through the tax and social security systems.
In a marked departure from official rhetoric, state media have published sensational stories or videos of how some young entrepreneurs have gotten rich by running stalls at night markets and encouraging unemployed youth to become street vendors.
“It seems the CCP is also hoping to catch the lightning bolt in the bottle and maybe tap a new vein of small business that could stem a growing tide of cynicism among unemployed college graduates,” said Alex Capri, an associate professor at NUS Business School.
The informal trade could temporarily reduce unemployment and give a boost to people feeling poorer, but it “will not save China’s economy,” Tsang said.
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