|Theena Ocay |||Jan 04, 2017 01:13 AM EST|
(Photo : Facebook) As announced last year, China is starting to shake up its millennial-old salt monopoly system.
China has started to shake up its millennial-old salt monopoly by releasing new regulations effective this year that allow producers to set prices and sell directly to the market.
China's state media on Monday said that the move would lead to lower prices, with broadcaster CCTV hailing it as a "policy red envelope," which refers to the money-filled packets traditionally given away around Chinese new year, according to Fortune.
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What's in New Regulation?
Under the new regulation, existing wholesalers will now be allowed to operate outside their previously designated areas, run marketing campaigns, and introduce modern ways of salt distribution.
The new regulation is under a plan published by China's State Council last year, wherein government planners will retain supervision over retail pricing to prevent abnormal fluctuations, but prices will otherwise be set by the market.
The National Development and Reform Commission also said last year that starting 2017, producers will be able to sell salt at a price set based on production costs, quality of product, and the supply and demand of the market.
Reform or Improvement
Meanwhile, store managers and market observers are hopeful that salt prices will soon fall and that new salt products will arrive on shelves.
However, Zou Jialai, a Shanghai-based lawyer who has represented private salt producers, cautioned against trumpeting an end to the monopoly. He said he expects state-owned firms to continue to control how salt is sold, but with more competition than before.
"I want to say that it is not reform; it is just an improvement," Zou said.
History of Salt Monopoly
The worldwide production of salt is more than 200 million tons per year, and China is one of the five nations in the world that dominates the salt industry, according to statistics. The other nations are US, Canada, India, and Germany.
The practice of monopolizing salt in China, which began during the rule of Emperor Wu of Han onwards, helped pay the construction of the Great Wall. Every dynasty in China's history has instituted a salt monopoly system for taxation purposes since salt was a necessary commodity used in daily life.
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