Kuala Lumpur – For a decade, I lived in a leafy Shanghai neighborhood known for unlicensed street vendors who sold barbecued lamb kebabs, knock-off DVDs and (often) hashish. Local police long tolerated their presence, usually in return for DVDs and kebabs. But eventually, as the neighborhood trended upscale and orderly, the stalls and the vendors were pushed out, victims of China’s often-brutal bid to rid its streets of informal businesses and the headaches they created.
Two weeks ago, that national campaign abruptly halted when Li Keqiang, China's premier, invited the street vendors to return. His rationale was twofold. First, China is facing a significant economic downturn and needs all the jobs it can get. And second, street vendors make tasty food. He's right on both counts, but unfortunately wrong on the policy. Reopening China's cities to unregulated street vendors would only undermine the government’s far more important priorities.
More than 2,000 years ago, Chinese writers were already complaining about migrants who set up unlicensed businesses on city streets. A millennium later, Zhang Zeduan painted "Along the River During the Qingming Festival,” a revered scroll (sometimes referred to as "China’s ‘Mona Lisa’ ”) that depicts daily life during the Song Dynasty. Street vendors are prominently stationed in the busiest parts of the city, hawking food and goods.
That kind of commerce persisted until the 1950s, when Mao Zedong's anti-capitalist ideologues banned private enterprise. The end of the Cultural Revolution (and of Mao) in the mid-1970s marked the beginning of a street-vending renaissance. As China's youth returned from involuntary exile in the countryside, the government opened up private businesses. And with capital scarce, entrepreneurs often opted to sell on the streets, offering traditional foods or (increasingly) the low-cost goods being produced in the country's new factories. Their numbers grew rapidly, especially in the 1990s as the government shut down unwieldly state-owned companies and laid off millions of workers.
Other factors, too, boosted their numbers. For one thing, their customer base expanded as hundreds of millions of workers migrated into cities in search of work and in need of cheap food and goods. For another, the government was largely indifferent to informal workers, and left them unregulated.
This turned out to be a mixed blessing. The vending trade quickly expanded, but so did the problems associated with it. By the early 2000s, Chinese media were running stories on the use of "gutter oil" — basically, used cooking oil that's sold (and resold) under unsanitary conditions. The primary market for the product has always been the low-margin small restaurant or food cart. But when there are millions of such businesses, and local governments are disinclined to shut them down or fine them, eradicating such practices is difficult.
Similarly, the sale of fake goods soon soared on China’s streets. Not that long ago, it was still possible to buy counterfeit DVDs of Hollywood releases a block from the U.S. embassy in Beijing. It was a high-margin trade, and the local officials who always said the right things in public about intellectual property managed to find reasons to look the other way in private. When cities did crack down, it was often via violent means that proved quicker than regulatory fixes but also highlighted ham-handed governance.
Belatedly, some cities have come to see the wisdom of a different approach: establishing a sanitized and regulated trade that actually protects the public. In 2017, Beijing required its 300,000 street-food sellers to get a license, operate at fixed locations and stop serving potentially hazardous fare, such as raw seafood. Inevitably, that effort has shrunk the street-vendor community — but also made it much safer for the public.
Such rules may not boost employment as the unbridled approach of the 1990s did. But unlike recent proposals for a street-vendor restoration, they’re the right way to grow the sustainable businesses the country needs as it rebuilds from COVID-19. Nostalgia for a chaotic and unsafe past shouldn't divert China from building a better future.
Adam Minter is a Bloomberg Opinion columnist based in Asia.