China’s Street Vendor Economy: Can this Informal Economy solve the Employment Crisis in China?

In 2020, the unprecedented COVID-19 pandemic led to rising unemployment in China, affecting over 100 million urban workers and around 25 million migrant workers. ¹1. International Labour Organization, “China – Rapid Assessment of the Impact of COVID-19 on Employment,” Report (Policy Brief), July 29, 2020, http://www.ilo.org/emppolicy/areas/covid/WCMS_752056/lang--en/index.htm. By March 2020, the urban unemployment rate had reached 6 percent. Street vending, as a way to sustain livelihoods, became widely promoted by both central and local governments. Later, the government of Chengdu claimed that by supporting street vending, it has created more than 100,000 jobs within 2 months.²2. Worker’s Daily, “The Story after Chengdu’s Successful Street Stall Economy,” accessed January 21, 2021, http://www.xinhuanet.com/fortune/2020-06/03/c_1126067890.htm. The State Council further promulgated a document, allowing the setting up of street stalls in certain permitted areas.³3. The State Council of China, “Implementation Opinions of the General Office of the State Council on Strengthening Employment Stabilization Measures in Response to the Impact of the New Coronary Pneumonia Epidemic _Government Information Disclosure Column,” March 20, 2020, http://www.gov.cn/zhengce/content/2020-03/20/content_5493574.htm The buzzword ditan jingji (地摊经济), or street vendor economy, begun to catch public attention.

Proponents of street vending argued that it has been an important way to create jobs. However, various problems such as unsanitary streets, traffic congestions, and conflicts between street vendors had arisen as a result. More detailed, specific, and consistent policies were needed to address the street vending issues.

As an informal economy, street vending has been a way for the rural migrants to make a living in urban cities. While some may be forced to take up street vending, street vending had been profitable for these migrants. Besides rural migrants, some street vendors were unemployed locals, laid-off workers and college students⁴4. Swider, “Reshaping China’s Urban Citizenship.” , who struggled with formal employment⁵5. Xue and Huang, “Informality and the State’s Ambivalence in the Regulation of Street Vending in Transforming Guangzhou, China.” . Being a street vendor was a temporary solution. During the pandemic, this group of street vendors increased as a growing number of companies shut down.

The street vendors usually had high mobility. To maximise their customer numbers, they positioned themselves in areas of high population density⁶6. Ibid. such as bus stops, metro station exits.⁷7. Caron, “Interactions Between Chengguan and Street Vendors in Beijing. How the Unpopularity of an Administration Affects Relations with the Public.”

Inconsistent Street Vending Policies

China's street vending policies had undergone several changes in the past few decades.

Between 1949 and 1977, the Chinese government utilised street vending for economic growth at first but gradually took a stricter approach in the control of street vending alongside the process of socialist transformation. Later, the government's attitude towards street vending became more tolerant after China's economy started opening up in 1978. Street vending served to meet the needs of daily life and to expand employment.⁸8. Ning Ma and Meifen Zhu, “Thoughts on the Development of ‘Market Stall Economy’ from the Perspective of a Harmonious Society,” Legal System and Society, no. 25 (2010), https://kns.cnki.net/kcms/detail/detail.aspx?dbcode=CJFD&dbname=CJFD2010&filename=FZSL201025060&v=rOoF%25mmd2Bb0W8zgdx%25mmd2FSu9OT4SOGoDtyN4NdC2Kxa6Q2Bo9vCc4g%25mmd2FbFxuQsa%25mmd2BW95WAFxV.

In 2003, the central government rolled out the plan to select National Civilised Cities. Street vending was defined as a sign of dirtiness, disorder and backwardness.⁹9. Xue and Huang, “Informality and the State’s Ambivalence in the Regulation of Street Vending in Transforming Guangzhou, China.” Thus, the chengguan (a Chinese urban management and law enforcement officer) was dispatched to regulate street vending, and conflicts between chengguan and street vendors arose almost every day. To reduce conflicts and create a harmonious society, policies towards street vending had become more inclusive after 2010.¹⁰10. Xue and Huang, “Informality and the State’s Ambivalence in the Regulation of Street Vending in Transforming Guangzhou, China.”

Since 2020, to alleviate unemployment caused by Covid-19, policies have been promulgated to support street vending again. Street vending now is considered an important way to increase employment.

Problems of Street Vending

Competition among many street vendors was intensifying such that street vendors had to compete for spaces to maximise their profits. As a result, conflicts and fights had arisen frequently over the location of street stalls.

In addition, the legalisation of the status of street vendors was still in its infancy. Formal and long-term policies and regulations for the management of street vendors have yet to be formed in China, and different cities adopted different regulations towards street vending.

On the other hand, inconsistent policies were hard for the chengguan to implement. "Sometimes, the policies are put on hold; sometimes the authorities would suddenly stop the existing policies and set up new ones", a chengguan recounted.¹¹11. Bell and Loukaitou-Sideris, “Sidewalk Informality.” This created uncertainty for chengguan in enforcement, and conflicts between chengguan and vendors might be easily triggered. As a result, vendors commonly used mobile facilities to run their businesses because fixed stalls were not permitted to be set up on the street, and if the chengguan were to evict them, the vendors could leave quickly to avoid fines.¹²12. Zhong and Di, “Struggles with Changing Politics.”

Moreover, since street vendors could sell goods on the street, it also affected traffic and brought risks to traffic safety. As more street vendors occupied roads to sell things on the street, chaotic street vending would put heavy pressure on traffic.

Poor sanitation associated with street vending could not be ignored either. Most food street vendors had significantly lower education levels and had no formal food safety training and were thus unaware of their unsanitary practices. ¹³13. Lihua Ma et al., “Food Safety Knowledge, Attitudes, and Behavior of Street Food Vendors and Consumers in Handan, a Third Tier City in China,” BMC Public Health 19, no. 1 (August 16, 2019): 1128, https://doi.org/10.1186/s12889-019-7475-9. Countless plastic bags, paper bowls and other food waste were left on the streets, affecting the urban environment.

Learning Points

Develop Vendor Centres within Walking Distances

Setting up dedicated spaces for street vendors within walking distances can not only help street vendors to conduct business, facilitate standardised management but also offer more convenience to residents. In the past, permit systems were focused more on regulating tradingspaces in China. However, most approved areas were in unpopular areas, where there were fewer customers and profits.¹⁴14. Ibid. Therefore, some might risk vending in prohibited areas¹⁵15. Ibid. or attempt to extend their operating hours.¹⁶16. Li et al., “A City’s ‘Urban Crack’ at 4 a.m.” The establishment of permitted areas did not create the expected effects.

As the only country where all street vendors are licensed and relocated in what are known as hawker centres,¹⁷17. Sharit K Bhowmik, “Street Vendors in Asia: A Review WIEGO,” May 2005, https://www.wiego.org/publications/street-vendors-asia-review. Singapore's model of setting up approved areas however, appeared to be more successful. Each hawker centre had up to 226 food stalls,¹⁸18. Joan C. Henderson, “Foodservice in Singapore: Retaining a Place for Hawkers?,” Journal of Foodservice Business Research 19, no. 3 (May 26, 2016): 272–86, https://doi.org/10.1080/15378020.2016.1175900. Bell and Loukaitou-Sideris, “Sidewalk Informality.” uniform furnishings and fittings, and dedicated persons responsible for maintenance and cleaning. Most importantly, hawker centres were within walking distances from residential areas, which could ensure a steady source of customers. By setting up collective vending centres within walking distances from prime areas (such as residential areas, shopping malls, metro stations exit etc.) in China, street vendors could be more assured of profits, and residents could get affordable food and daily necessities in an organised and convenient environment. Moreover, it would be easier for chengguan to manage the street vendors.

Establish a Business-Friendly System for Licensing

Besides setting up collective vending centres, China can also establish a more business-friendly system for licensing. Based on a study on street vendors conducted in Beijing in 2012, most of the respondents had tried to obtain permits, but they were not successful.¹⁹19. Bell and Loukaitou-Sideris, “Sidewalk Informality.” In contrast, Singapore had a licensing system offering one-stop services for hawkers and stallholders.²⁰20. “Hawkers Online,” accessed January 21, 2021, https://e-services.nea.gov.sg/hcms/. The Hawker Centres Group (HCG) under the National Environment Agency (NEA) plays a key role in managing hawker centres, as well as implementing and reviewing the policies on food hawkers in Singapore.²¹21. National Environment Agency, “Overview,” accessed January 30, 2021, https://www.nea.gov.sg/our-services/hawker-management/overview. In a similar fashion, a union of street vendors could be set up to coordinate with chengguan for better street vending management.

(Photo: David Stanley)

Read more about the case study China's Street Vendor Economy: Can this Informal Economy solve the Employment Crisis in China? written by Fu Xinhong, Huang Minjun and Xi Nan, which was awarded a Merit Prize in the Case Writing Competition 2020/21 at the Lee Kuan Yew School of Public Policy.

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