A new wave of “shared economy” emerges out of the Chinese economic blues

In the face of China’s escalating economic crisis, its citizens are innovating to survive. Businesses are adapting, and communal living spaces are emerging as a response to soaring rent costs. Despite the Chinese Communist Party’s attempts to stimulate the economy, the impact has been negligible. The advent of the “new sharing economy” has seen the rise of shared storefronts, employees, and even beds, as a means to mitigate costs. The disparity between the official narrative and the lived reality is stark, revealing a nation grappling with economic turmoil, caught between its aspirations and the harsh economic realities.

In the first quarter of 2024 China’s official GDP data showed a growth of 5.3% but this figure starkly contrasts with the sentiments of the people. Despite the Chinese Communist Party rolling out numerous policies to stimulate the economy the efforts have proven to be ineffective. Across the Nation there is a trend of tightening belts with widespread practices such as layoffs, salary reductions, cost-saving measures and efficiency improvements. Currently all Industries are facing challenges with the CCP promoting the so-called “new sharing economy”. Business owners are now sharing storefronts before the pandemic physical stores preferred large establishments keeping customers inside for hours. However, in just a few years even renting a storefront has become overcrowded, shared storefronts are now sweeping across the mainland the phenomenon of shared storefronts where business is alternate during the day. For instance, a breakfast bun shop in the morning, a fast food joint at noon and a barbecue stall in the evening.

Coffee is now being sold in real estate agencies, clothing stores, bookshops and even temples for example in Beijing’s Chaoyang district renting a breakfast bun shop costs approximately 40,000 to 50,000 Yuan about $6,900. By splitting it into three time slots renting only the morning slot would require just 13,000 Yuan effectively saving nearly 3/4 of the cost. For a brick and mortar store rent typically accounts for around 25% to 30% of monthly expenditures in the first quarter preliminary statistics show that around 4 60,000 food and beverage establishments in China have closed down. A restaurant entrepreneur in Beijing revealed that all the money he earned in the past 6 months was used to pay the rent. The shared employees who receive even worse treatment than outsourced workers many enterprises are already in a downturn with personnel expenses constantly rising.

At the same time companies have to pay increasing Social Security fees, for example in the past 5 years the base for Social Security contributions in Shanghai has risen by as much as 55.6%. Consequently, to reduce wage costs and avoid paying Social Security shared employees have emerged. In reality these so-called shared employees are even worse off than outsourced workers as some people remarked it’s like recalling the old days in the countryside when neighbours borrowed each other’s oxen to plough the fields.

In China the hierarchy of Personnel in state-owned units, ranges from civil servants to staff with established positions and non-staff personnel. Similarly, in private enterprises the hierarchy ranges from regular employees to outsourced workers and shared employees. The hierarchy signifies a decrease in salary and benefits accordingly shared employees in private enterprises may not even have the five insurances and one housing fund effectively akin to running naked in the job market. The Jiangsu Economic Daily once reported if a company’s average employee salary is 5,000 Yuan, full Social Security contributions for regular employees amount to 950 Yuan while outsourced workers only need to pay a minimum base of 570 Yuan. Shared employees may even save this 570 Yuan, the escalating cost of Labour forces companies to opt for cheap shared employees.

Furthermore, there’s also the emergence of bed sharing according to the 2023 graduate’s rental survey report in the ideal state of over 80% of young people rent should be kept below 30% of their salary. As a result, on social media platforms in the first tier cities known as Chinese work destinations many Shanghainese and Beijingers have started posting inquiries “anyone willing to share a bed with me”? from shared storefronts and shared employees to Shared beds the Pinduoduo style collaborative shopping trend to save costs has become the most authentic social and economic phenomenon in mainland China in 2024.

In conclusion, China’s economic downturn has catalysed a shift towards a “new sharing economy”. This has manifested in shared storefronts, shared employees, and even shared beds. These adaptations, born out of necessity, reflect the resilience of the Chinese people in the face of economic adversity. However, they also underscore the stark contrast between the official economic narrative and the lived reality of job seekers and business owners. This phenomenon is a poignant reminder of the human cost of economic turmoil and the lengths to which people will go to survive.

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