Connect with us


A barbecue frenzy is gripping China. Can street food revive the economy?



When China was in the midst of a pandemic-induced economic slump in 2020, then Premier Li Keqiang touted the idea of creating jobs by encouraging street vendors to set up shop across the country. That pitch was quickly shot down by close associates of leader Xi Jinping, who characterized the traditional trade as “unhygienic and uncivilized.”

Just three years later, how the tables have turned.

In a major policy reversal, the “street vendor economy” is making a comeback with many cities lifting curbs on hawkers and encouraging jobless youth to set up open-air stalls as a way to revitalize the economy and boost employment.

Shenzhen, China’s high-tech hub and the third richest city, announced last week that it will lift a blanket ban on street vendors, allowing them to operate from the start of September in designated areas.

It joins a list of major cities that have relaxed curbs this year, including Shanghai, Hangzhou and Beijing, after years of sometimes violent campaigns against hawking. City authorities are encouraging people to set up street stalls or carts in certain areas, where they can sell local specialties, snacks, clothes or toys.

Analysts see the current relaxation as a desperate measure by the government, as urban unemployment has surged to worrying levels after three years of pandemic restrictions hit small businesses hard. A regulatory crackdown has also wiped out tens of thousands of jobs in the education and tech industries.

People queue up to buy snacks at a night fair on June 13, 2022 in Nanning, Guangxi Zhuang Autonomous Region of China.

“It does look like the Chinese leadership cannot find better ways to create employment and thus maintain stability and order than encouraging young people to be street vendors,” said Steve Tsang, director of the SOAS China Institute at the SOAS University of London.

“For workers or graduates with skills for the digital era, taking on street vending is a sign of desperation rather than creative thinking.”

The urban unemployment rate for 16- to 24-year-olds hit 19.6% in March, the second highest on record. That translates to about 11 million jobless youth in cities and towns, according to CNN calculations based on the most recent government data.

The figure could increase further, as a record 11.6 million college students are expected to graduate this year.

May 1959: Customers buying fresh vegetables from a market in Beijing (Peking), China's capital city.

Viral success

The lifting of restrictions came after a little known factory town became a viral sensation for its outdoor barbecue stalls, inspiring other cities to try to copy its success.

Zibo, located in the eastern province of Shandong, is currently China’s hottest travel spot. Its popularity exploded in March after videos of its cheap barbecue went viral on social media.

Its main delicacy is grilled pieces of skewered meat, hot off open charcoal flames, served with flat bread and pieces of local leek. Besides bargain eats -— a meal can cost just 30 yuan ($4.2) per person — the town is known for its hospitality.

“The food is very cheap,” said Jiang Yaru, a Zibo local who currently works in Shanghai. She went home during the May Day holiday last week, just to “taste the barbecue and join the fun.”

The barbecue restaurants she visited were all packed with crowds, many of whom were young people.

“Local people are very hospitable and honest to strangers, which I think is a main reason [why the city is so hot],” she told CNN. “This is a novel experience for many visitors, because other tourist cities might not have treated them well.”

This aerial photo taken on May 8, 2023 shows people enjoying Zibo-style barbecue cuisine in the city.

So many tourists flocked into Zibo, now dubbed China’s outdoor barbecue capital, that even the local tourism authorities urged visitors to go elsewhere. Thanks to the craze, the gritty factory town saw 4.7% growth in GDP for the first quarter, mainly boosted by retail, tourism and dining. Consumption surged 11% during the same period, reversing a 2% decline posted in the first two months of the year.

The town’s overnight transition from industrial backwater to must-see destination has stunned the country. A number of municipal governments have sent officials to Zibo to study from the locals and try to replicate their success.

So can the “stall economy” jump start the country’s pivot to an elusive consumer-led model of growth?

“It looks to me that Zibo has made a virtue out of a necessity,” Tsang said. “Its success may reflect the effectiveness of a ‘novelty’ but also a sign of people feeling poorer. Who really prefers street food to a Michelin star restaurant, if one can afford the latter? A few may, but most won’t.”

A shop owner shows off grilled meat during a barbecue festival on April 29, 2023 in Zibo, eastern China. The city Zibo became a tourism hot spot after videos of its barbecue went viral online.

‘Catch lightning in a bottle’

The popularity of Zibo suggests people want to travel and enjoy new experiences but are watching their wallets as China’s economic recovery appears patchy.

“The Zibo phenomenon is a combination of FOMO [fear of missing out] amongst Chinese municipalities and top-down pressure from the [Communist Party] to address unemployment and youth angst,” said Craig Singleton, senior fellow at the Washington-based Foundation for Defense of Democracies.

China’s economy is navigating a growing array of challenges. The crucial housing market is mired in its worst downturn on record. Business confidence has plummeted after Xi launched a regulatory onslaught against tech and education industries. Global firms have been rattled by raids on international consultancies.

Foreign investment in China has slumped. And relations between the United States and China are at their lowest point in decades, leading to escalating tensions in technology and investment.

A worsening economic outlook has prompted top leaders to strike a more conciliatory tone toward private business and small and medium enterprises, which contribute more than 60% to China’s GDP and over 80% of employment.

Luo Wen, head of the State Administration for Market Regulation, the country’s market regulator, last month offered more support for “individual businesses,” such as street vendors, through the tax and social security systems.

In a clear shift in the official rhetoric, state media has published sensational stories or videos of how some young entrepreneurs have become rich by operating stalls in the night markets, calling on jobless youth to become street vendors.

“It appears that the CCP is also hoping to catch lightning in a bottle and perhaps tap into a new vein of small scale entrepreneurship that might beat back a growing wave of cynicism amongst out of work college grads,” said Alex Capri, senior lecturer at NUS Business School.

The informal trade might reduce unemployment temporarily, and give people feeling poorer a boost, but it “won’t save China’s economy,” Tsang said.

Adblock test (Why?)


Source link

Continue Reading


Here is Trump economy: Slower growth, higher prices and a bigger national debt



If Donald Trump is re-elected president of the United States in November, Americans can expect higher inflation, slower economic growth and a larger national debt, according to economists.

Trump’s economic agenda for a second term in office includes raising tariffs on imports, cutting taxes and deporting millions of undocumented migrants.

“Inflation will be the main impact” of a second Trump presidency, Bernard Yaros, lead US economist at Oxford Economics, told Al Jazeera.

“That’s ultimately the biggest risk. If Trump is president, tariffs are going up for sure. The question is how high do they go and how widespread are they,” Yaros said.

Trump has proposed imposing a 10 percent across-the-board tariff on all imported goods and levies of 60 percent or higher on Chinese imports.

During Trump’s first term in office from 2017 to 2021, his administration introduced tariff increases that at their peak affected about 10 percent of imports, mostly goods from China, Moody’s Analytics said in a report released in June.

Those levies nonetheless inflicted “measurable economic damage”, particularly to the agriculture, manufacturing and transportation sectors, according to the report.

“A tariff increase covering nearly all goods imports, as Trump recently proposed, goes far beyond any previous action,” Moody’s Analytics said in its report.

Businesses typically pass higher tariffs on to their customers, raising prices for consumers. They could also affect businesses’ decisions about how and where to invest.

“There are three main tenets of Trump’s campaign, and they all point in the same inflationary direction,” Matt Colyar, assistant director at Moody’s Analytics, told Al Jazeera.

“We didn’t even think of including retaliatory tariffs in our modelling because who knows how widespread and what form the tit-for-tat model could involve,” Colyar added.

‘Recession becomes a serious threat’

When the US opened its borders after the COVID-19 pandemic, the inflow of immigrants helped to ease labour shortages in a range of industries such as construction, manufacturing, leisure and hospitality.

The recovery of the labour market in turn helped to bring down inflation from its mid-2022 peak of 9.1 percent.

Trump has not only proposed the mass deportation of 15 million to 20 million undocumented migrants but also restricting the inflow of visa-holding migrant workers too.

That, along with a wave of retiring Baby Boomers – an estimated 10,000 of whom are exiting the workforce every day – would put pressure on wages as it did during the pandemic, a trend that only recently started to ease.

“We can assume he will throw enough sand into the gears of the immigration process so you have meaningfully less immigration, which is inflationary,” Yaros said.

Since labour costs and inflation are two important measures that the US Federal Reserve weighs when setting its benchmark interest rate, the central bank could announce further rate hikes, or at least wait longer to cut rates.

That would make recession a “serious threat once again”, according to Moody’s.

Adding to those inflationary concerns are Trump’s proposals to extend his 2017 tax cuts and further lower the corporate tax rate from 21 percent to 20 percent.

While Trump’s proposed tariff hikes would offset some lost revenue, they would not make up the shortfall entirely.

According to Moody’s, the US government would generate $1.7 trillion in revenue from Trump’s tariffs while his tax cuts would cost $3.4 trillion.

Yaros said government spending is also likely to rise as Republicans seek bigger defence budgets and Democrats push for greater social expenditures, further stoking inflation.

If President Joe Biden is re-elected, economists expect no philosophical change in his approach to import taxes. They think he will continue to use targeted tariff increases, much like the recently announced 100 percent tariffs on Chinese electric vehicles and solar panels, to help US companies compete with government-supported Chinese firms.

With Trump’s tax cuts set to expire in 2025, a second Biden term would see some of those cuts extended, but not all, Colyar said. Primarily, the tax cuts to higher earners like those making more than $400,000 a year would expire.

Although Biden has said he would hike corporate taxes from 21 percent to 28 percent, given the divided Congress, it is unlikely he would be able to push that through.

The contrasting economic visions of the two presidential candidates have created unwelcome uncertainty for businesses, Colyar said.

“Firms and investors are having a hard time staying on top of [their plans] given the two different ways the US elections could go,” Colyar said.

“In my entire tenure, geopolitical risk has never been such an important consideration as it is today,” he added.



Source link

Continue Reading


China Stainless Steel Mogul Fights to Avoid a Second Collapse



Chinese metal tycoon Dai Guofang’s first steel empire was brought down by a government campaign to rein in market exuberance, tax evasion accusations and a spell behind bars. Two decades on, he’s once again fighting for survival.

A one-time scrap-metal collector, he built and rebuilt a fortune as China boomed. Now with the economy cooling, Dai faces a debt crisis that threatens the future of one of the world’s top stainless steel producers, Jiangsu Delong Nickel Industry Co., along with plants held by his wife and son. Its demise would send ripples through the country’s vast manufacturing sector and the embattled global nickel market.



Source link

Continue Reading


Why Trump’s re-election could hit Europe’s economy by at least €150 billion



A Trump victory could trigger a 1% GDP hit to the eurozone economy, with Germany, Italy, and Finland most affected. Renewed NATO demands and potential cessation of US aid to Ukraine could further strain Europe.

The potential re-election of Donald Trump as US President poses a significant threat to the eurozone economy, with economists warning of a possible €150 billion hit, equivalent to about 1% of the region’s gross domestic product. This impact stems from anticipated negative trade repercussions and increased defence expenditures.

The recent attack in Butler, Pennsylvania, where former President Trump sustained an ear injury, has boosted his re-election odds. Prediction markets now place Trump’s chances of winning at 71%, a significant rise from earlier figures, while his opponent, Joe Biden, has experienced a sharp decline, with his chances dropping to 18% from a peak of 45% just two months ago.

Rising trade uncertainty and economic impact from tariffs

Economists James Moberly and Sven Jari Stehn from Goldman Sachs have raised alarms over the looming uncertainty in global trade policies, drawing parallels to the volatility experienced in 2018 and 2019. They argue that Trump’s aggressive trade stance could reignite these uncertainties.

“Trump has pledged to impose an across-the-board 10% tariff on all US imports including from Europe,” Goldman Sachs outlined in a recent note.

The economists predict that the surge in trade policy uncertainty, which previously reduced Euro area industrial production by 2% in 2018-19, could now result in a 1% decline in Euro area gross domestic product.

Germany to bear the brunt, followed by Italy

Germany, Europe’s industrial powerhouse, is expected to bear the brunt of this impact.

“We estimate that the negative effects of trade policy uncertainty are larger in Germany than elsewhere in the Euro area, reflecting its greater openness and reliance on industrial activity,” Goldman Sachs explained.

The report highlighted that Germany’s industrial sector is more vulnerable to trade disruptions compared to other major Eurozone economies such as France.

After Germany, Italy and Finland are projected to be the second and third most affected countries respectively, due to the relatively higher weight of manufacturing activity in their economies.

According to a Eurostat study published in February 2024, Germany (€157.7 billion), Italy (€67.3 billion), and Ireland (€51.6 billion) were the three largest European Union exporters to the United States in 2023.

Germany also maintained the largest trade surplus (€85.8 billion), followed by Italy (€42.1 billion).

Defence, security pressures and financial condition shifts

A Trump victory would also be likely to bring renewed defence and security pressures to Europe. Trump has consistently pushed for NATO members to meet their 2% GDP defence spending commitments. Currently, EU members spend about 1.75% of GDP on defence, necessitating an increase of 0.25% to meet the target.

Moreover, Trump has indicated that he might cease US military aid to Ukraine, compelling European nations to step in. The US currently allocates approximately €40bn annually (or 0.25% of EU GDP) for Ukrainian support. Consequently, meeting NATO’s 2% GDP defence spending requirement and offsetting the potential reduction in US military aid could cost the EU an additional 0.5% of GDP per year.

Additional economic shocks from Trump’s potential re-election include heightened US foreign demand due to tax cuts and the risk of tighter financial conditions driven by a stronger dollar.

However, Goldman Sachs believes that the benefits from a looser US fiscal policy would be marginal for the European economy, with by a mere 0.1% boost in economic activity.

“A Trump victory in the November election would likely come with significant financial market shifts,” Goldman Sachs wrote.

Reflecting on the aftermath of the 2016 election, long-term yields surged, equity prices soared, and the dollar appreciated significantly. Despite these movements, the Euro area Financial Conditions Index (FCI) only experienced a slight tightening, as a weaker euro counterbalanced higher interest rates and wider sovereign spreads.

In conclusion, Trump’s potential re-election could have far-reaching economic implications for Europe, exacerbating trade uncertainties and imposing new financial and defence burdens on the continent.



Source link

Continue Reading