BEIJING, June 4 (TMTPOST) For decades across Chinese cities, street vendors without proper business licenses were chased away by Chengguan, city law enforcement officers.  This was sometimes accompanied by the confiscation of their goods and occasionally with brutality. Now they can return to the streets, feeling safe and welcomed.

In the recently-concluded Lianghui, the annual law-passing session of China’s equivalent of U.S. Congress, Chinese Premier Li Keqiang said that a total of 600 million Chinese made less than 1,000 yuan (about US$141) per month, signaling an uphill battle to boost the nation-wide average income.

In early June, Li told a roadside food stall owner during his trip to Yantai city of Shandong Province that street vendor stalls and small stores were “a major source for job creation” and as essential as high-end high-tech sectors to the Chinese economy. He went on to coin a new term of “the economy of street vendors”.

His comments instantly became the talk of China. Almost everybody is talking about making money by setting up a roadside booth, with no need to apply for a business license or a sanitary permit. Is it just a fad or a sustained and integral part of the economy? A glimpse into the context and history may reveal the answer.

Crowded Job Markets

In 2020, 8.74 million university graduates, a new high after 2019, will flood the job markets. Last year, 8.34 million graduates set the record. The graduates make up about 85% of the annual addition to the workforce.

Public universities, the vast majority of higher education institutions in China, plan to admit 189,000 more applicants into graduate programs for the fall term of 2020 in an effort to shave the peak of surging job seekers.

Earlier this year, the Chinese government coined catchwords for this year’s policy: stabilizing job creation, finance, exports, foreign direct investment, investments and expectations. Jobs came as the No.1 priority.

Exports, a major driver of China’s economy, have been losing steam this year due to the COVID-19 pandemic, which first emerged in Wuhan in late December and spread to Europe in February and North America in March. Due to the collapse in demand in Europe and North America amid the widespread lock-down to slow the spread of the virus, China’s exports fell 6.4% year-over-year in the first four months of this year.  

In April, exports rose 8.2% from the same period of 2019 but that was mainly due to a hefty rise in exports in masks, gloves and other personal protective equipment (PPE). Electronics shipments fell by 5.9%, garments tumbled 20% and furniture plummeted 15.7%. With no end of the pandemic in sight, a decline in exports is highly likely to continue. 

Domestic consumption, another major driver of the economy, has slumped into a long and deep trough since the outbreak of the coronavirus in late January. Labor-intensive restaurants, tourism, travel and hotels were among the hardest-hit sectors. By late April, about 85% of industrial companies resumed 50% of their capacity but the construction and service sector reported a much lower percentage in business reopening.

When the economic fallout of the coronavirus pandemic meets the largest number of university graduates, job markets will become unusually crowded and competition will be cutthroat. A report released by Zhongtai Securities claims that the real unemployment rate this year could be as high as 20.5%, which translates into about 70 million people out of work.  

Jack Ma, the founder of China’s largest e-commerce platform Alibaba Group, admitted the adversity faced by the Class of 2020. The teacher-turned entrepreneur said in late May: “at this moment in time to graduate, to look for a job, to enter society, you all may feel very unlucky.”

Although a roadside business sounds informal and unglamorous, it requires small investments and minimal fixed assets. The low threshold for the curb business, as a form of self-employment, appeals to many.

Soaring Food Prices

In the first four months of this year, food prices jumped signficantly from the same period of 2019. Compared with the same period of last year, food prices went up 20.6% in January, 21.9% in February, 18.3% in March and 14.8% in April. Among the food items, pork prices surged 116% year-over-year in January, 135% in February, 116.4% in March and 96.9% in April while meat prices jumped 76.7% in January, 87.6% in February, 78% in March and 66.7% in April. 

The surge in pork price was mainly due to a devastating swine fever epidemic. As consumers shifted away from suddenly expensive pork to other meat, chicken, beef and lamb prices were pushed up. Prices of fruits and vegetables have climbed this year amid the coronavirus epidemic.

Rising food prices have put pressure on ordinary consumers. As roadside food stalls mean much less or even zero rent and other expenses, food prices are highly likely to be slashed.  

Street Vendors Return 

Roadside or itinerant vendors have been restricted across Chinese cities in the past few decades as the cities made efforts to create a clean and posh image. Those vendors were often accused of blocking traffic, making the streets dirty and posing sanitary risks.

For decades, the administration of street vendor businesses had been a key factor in the nation-wide clean city assessment. The mayor of a city with the certification of “civilized city”, which mainly means a clean and green city, has better chances for a promotion.

On May 27, the Office of the Central Commission for Civilization announced that a few metrics, such as vendor stalls blocking the sidewalk, roadside markets or itinerant vendors, are no longer used for certifying “civilized cities”.

The office said that reviving local economies and satisfying the needs of city dwellers should be accommodated in the process of building a clean city.  

Night markets and food stalls can operate in designated areas in parks, city squares and empty public spaces as long as they don't block traffic or constitute a nuisance to residents’ normal life. The vendors are prohibited from making streets dirty, the office said.

Vendors are also allowed to open off-peak time roadside businesses, such as in early morning or at night. Charges for occupying the sidewalk are exempted but they must operate in an orderly manner, the office said.

Before the policy was introduced nation-wide, some cities had started a trial. Chengdu, a city known for its convenient and leisurely lifestyle, was among them.

On March 15, Chengdu unveiled a plan to allow street vendors to operate. The municipal government in southwestern China has designated over 2,234 areas for roadside businesses, 82 promotion areas on the sidewalks near large shopping malls and 17,891 vending spots. The measures have created more than 100,000 jobs since then, according to the government. 

The central government's new policy sent stocks related to the "street vendor economy" soaring. On Tuesday and Wednesday, stocks of the companies linked to the economy of “street vendors”, such as companies of umbrellas, stalls, beers and duck snacks, went up. On Thursday, shares of Wuling Motors, touted as a mobile makeshift roadside stall, surged 56% by noon. 

Chengguan’s Role Reversal  

Chengguan is one of the most frequently used phrases in the Chinese language. The youth often teased that Chengguan, who are in a gray uniform, are the secret weapon of China, more powerful than the military, given their reputation of scaring away street vendors, who would react like a mouse upon detecting the ominous arrival of a cat.

The term “Chengguan’ first appeared in 1990 in an official document issued by the Ministry of Development as cities started to expand quickly along with the urbanization process. Its original mission was to prevent sidewalk or park/square encroachment by street vendors, littering, graffiti, spitting, vandalism, etc.

As both migrant workers originating in villages and laid-off state-owned factory workers set up food stalls in the 1990s and the 2000s, they clashed with chengguan from time to time, occasionally fatally. Two high-profile controversial cases rattled the public across China. In 2007, migrant worker-turned-vendor Cui Yingjie in Beijing stabbed a chengguan to death after his brand new tricycle was confiscated. In May 2009，laid-off factory worker-turned-vendor Xia Junfeng in Shenyang stabbed two chengguan officers to death after a scuffle with chengguan. 

With the introduction of the new policy that encourages people to engage in the informal economy, the role of chengguan has totally reversed.

In Ruichang city of Jiangxi Province, a few small merchants recently received phone calls from Chengguan, asking them to start a roadside business. One guy was so shocked that he exclaimed: “What amazing news! I will ask other vendors to join me in opening business together.”