Li Keqiang’s hawker economy thrives in Mao country

Shuli Ren, Bloomberg

As China’s property downturn continues, local governments are trying to come up with an alternative development model to make ends meet and provide jobs. A few cities may have found a way out.

Changsha, capital of the central Hunan Province, where a young Mao Zedong studied and lived, is banking on tourism to keep its economy going. Young people who want to party are attracted by the night life, and the spicy cuisine that Communist China’s founding father so loved.

The city center is a labyrinth of small stalls selling food, drinks and trinkets. China’s jobless divas can have a fun night out for less than $20. Five pieces of stinky tofu (imagine the taste of deep-fried dough stuffed with blue cheese) costs 10 yuan ($1.38). Tea latte — a blend of flavored tea with fresh milk — is another local draw.

An extreme example of this street-vendor culture is on display at Wenheyou, a multi-story food market built as a replica of narrow alleyways surrounded by low-rise buildings. The decor is vintage, reminiscent of 1980s Changsha, before economic reform changed the city’s landscape. A big bucket of crawfish, spiced with garlic and chili oil, costs about 240 yuan.

Hawkers carrying boxes hanging from bamboo poles go from table to table, selling snacks. It’s a novelty for young people born in modern-day China. They lap it up, happily trying local foods and taking Instagram-worthy photos. Wenheyou is so retro that one can easily forget time and space: It’s actually part of a commercial high-rise that also houses the swanky Grand Hyatt hotel.

Changsha would have been touted as a great success by former premier Li Keqiang, who passed away last year.

In 2020, at the onset of the Covid-19 pandemic, he spoke repeatedly and enthusiastically about this traditional form of commerce as a way to create jobs. But President Xi Jinping seemed to take a dim view. The capital city of Beijing, for one, should be a political center, not a “hodgepodge” of factories and vendors in alleyways, he said last May.

That’s a fair comment. But most cities don’t have the clout and talent pool of Beijing. Thus, they will have to do with hawkers to survive the economic slowdown. After all, most citizens are not trained engineers who can build chips and electric vehicles, industries that Xi is lavishing with state subsidies.

These days, good stable income is hard to come by. Take the unskilled. Working for ride-hailing apps such as Didi Global Inc. used to be lucrative, but a slowing economy and a low-entry barrier have resulted in an influx of new drivers, and thus overcapacity. The hawker economy, then, is perhaps a way to supplement residents’ daytime earnings and take some pressure off local officials.

In addition, not all street stalls stay in the dark alleyways. Some blossom into brands and unicorns, and Changsha has become the proud incubator of several. Hey Hey Black, which sells the black-colored stinky tofu unique to Hunan cuisine, has more than 1,800 locations nationwide and is hailed by People’s Daily as a “success.” Chayan Yuese, a milk-tea maker, has received venture capital investments and is eyeing a listing in Hong Kong.

As the Communist Party’s top ranks gather later this month for one of the country’s biggest policy meetings, reform-minded academics have been offering ideas on how to chart the economic course over the next decade.

Interestingly, one prominent scholar pointed out at a symposium Xi attended in May that China’s productivity push would have to avoid the problem of regions copying and undercutting each other. Xi hinted that he had gotten the message.

In other words, while top cities such as Beijing, Shanghai and Shenzhen can charge ahead with AI and the clean energy revolution, others, like Changsha, need to get creative. The hawker economy, which can incubate homegrown consumer brands, is a good start.

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