The “street vendor economy”, the latest economic policy from Premier Li Keqiang, has spread across China’s city streets in the past two weeks. It may seem alluring at first, but it’s far from a prescription for economic prosperity. A street vendor economy cannot save China.
During his visit to Yantai, Shandong province, on May 31, Li said: “Street vendors and small shops are important sources of employment. This is the ordinary people’s way of living. Just like those advanced and hi-tech industries, they are vital to the economy.”
Shanghai quickly announced a month-long festival promoting street nightlife. By June 4, at least 27 cities had enacted policies promoting street vendors.
Street vending has long been considered at odds with metropolitan modernity in China. For the past decade, city patrols and street vendors have engaged in a cat-and-mouse game on China’s streets, occasionally ending in brutality.
In 2017, Beijing party chief Cai Qi enacted evictions of Beijing’s “low-end population” in a massive city clean-up movement, a move to erase street vending in Beijing. The areas where migrant workers lived were cleared in 48 to 72 hours after the order.
02:31
Beijing’s snub puts street vendors on wrong side of regulations again
Beijing’s snub puts street vendors on wrong side of regulations again
Street vendors bring fond memories of once-lively metropolises in China in the early period of reform and opening up. China has travelled too far into the era of digital economy, online retail and data-driven e-commerce, though, to embrace the low productivity of street vendors. The street vendor economy is a dinosaur that belongs to China’s economic past.
Placing an ancient economic species at the centre of national policy – in an economy that is the world’s second-largest and aims to be the global leader for emerging technologies by 2035 – shows two things.
First, the new economy is not saving China for the time being. Second, while government interventions into the economy usually take the long view, this policy is meant to be short-lived.
The street vendor economy is only meaningful in the context of creating the illusion of job security for the unemployed. Government statistics show urban unemployment has been steady at around 6 per cent since the pandemic began, which translates to roughly 26 million unemployed city dwellers. However, China’s migrant workers – a major contributor to urban economies – aren’t counted in official employment figures.
National Statistics Bureau spokeswoman Liu Aihua said last month that the number of migrant workers who had returned to their cities of employment in April was at 90 per cent of levels in previous years.
This suggests more than 17 million migrant workers were still unemployed as of May, and that is in addition to 8.7 million graduates of Chinese universities joining the job market. The combination of these statistics shows China’s unemployment picture is even more worrying than some suggest.
Reviving the street vendor economy is all about jobs. Instant job creation helps lower the risk of mass social instability. If John Maynard Keynes was alive, he might call Li a disciple. Keynes influenced economic policy in the Great Depression era with his theory of fixing rising unemployment by creating jobs and generating demand.
A century later, the world has moved beyond Keynesian economics. Street vendors might bring temporary economic relief and the delight of self-employment, but ultimately it is an economic delusion. China’s race to global economic superpower status can only succeed with unwavering commitment to doubling down on technological empowerment and economic digitisation.
In March, the central government announced a massive stimulus plan to spur “new infrastructure” investment. City and provincial governments across China are rolling out plans to build 5G networks, data centres, smart cities, and other projects in the next five to 10 years. China is adding an estimated 10,000 5G base stations a week and will have more than 500,000 base stations by the end of 2020.
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Chinese engineers from Huawei, China Mobile build world’s highest 5G base station on Mount Everest
Chinese engineers from Huawei, China Mobile build world’s highest 5G base station on Mount Everest
In an event too orchestrated to be accidental, a group of mayors from Hubei province held a wave of social media live streams in April. The mayors went on popular social media apps such as Douyin – China’s TikTok – to promote local produce, accompanied by their accents and on-camera unease.
They were quickly overshadowed last month when Gree Electric Appliances chairwoman Dong Mingzhu sold 310 million yuan (US$43.7 million) of goods during a three-hour stream on Kuaishou. Viya Huang, a streamer who was virtually unknown to the world before 2017 but now enjoys a celebrity status in China on a par with Kim Kardashian in the West, sold a rocket launch service for 40 million yuan on an April stream that attracted more than 19 million viewers.
Once China has experienced the power of a digital economy, how can it travel back in time and return to a more labour-intensive, less productive output narrative?
SpaceX recently made history by sending astronauts to space on an American rocket again. Solemn salutes were made on Chinese social media to the spirit of innovation. While the United States celebrated the revival of its space economy, China celebrated the revival of its street economy. No country becomes a leading nation by adding flocks of vendors to its city streets.
Government policy intervention can create emotional exuberance on the streets. China’s leaders know a street vendor economy won’t save the country this time. They are simply soothing the public while stalling to also gaze at the stars.
Dr Shirley Ze Yu is a political economist, an Asia fellow at the Ash Centre for Democratic Governance and Innovation and a former Chinese national television (CCTV) news anchor
