Beijing has an endless list of hostel options for budget travelers. If you’re not familiar with this immense city, I would definately recommend staying within ring road two, or the blue loop line (same thing.) If you’re going to be in the city for a while (waiting for Visas perhaps), bounce around to a few different hostels to get a feel for different parts of town. You won’t be disappointed.
Leo Hostel Dorm 45RMB. This friendly, clean place is a ten minute walk south of Tiananmen Square, right off the Qianmen line 2 stop. The dorm room sleeps 12 which can make it a bit noisy. They have a nice restaurant with food between 15-40RMB ($2-5). Beers are 5RMB. The T.V. usually takes center stage in the common area which is kind of a pity with so many interesting folks to talk to. But if you like movies this is a good place to catch up on the latest releases.
The hutong (alley) where Leo is located is very touristy so watch out for restaurants that give you the second English menu with higher prices. Peking duck is generally a ripoff in this area and probably not very good.
The best thing about this place is the Secret Wall Tour offered for 180RMB. This is a rare Wild Wall tour that shouldn’t be missed. The price includes transportation and a nice Chinese lunch in a tiny village. This is a great value. If you try to see unrestored sections on your own you’ll end up paying the same anyway. This is the tour for people who hate tours! You can book this trip even if you’re not staying here. Read more here.
Red Lantern House 6 bed dorm 45, 4 bed 50. This place is a fifteen minute walk south from Jishuitan station and is brimming with charm. There are two places actually, but the new annex is the place to stay for a more lively social scene. It’s set in an old courtyard and the young staff are really nice, especially crazy Scott and cute Tina. Beers are 3RMB and they’ve just remodeled the kitchen and serve nice food, but I would recommend the surrounding restaurants in the hutongs. This is a really cool area of Beijing. The restaurants are excellent, cheap, and not as used to tourists. My favorite. There is also an open air market near the hospital with lots of fresh fruits, veggies and other fun food.