Reform of salt monopoly begins with ending administrative pricing

THE NATIONAL DEVELOPMENT AND REFORM COMMISSION, China's top economic planner, issued a notice on Sunday allowing salt producers to set the prices of their products from Jan 1. That is part of the ongoing reform of the table salt monopoly system, says Beijing Youth Daily:

In April, the State Council, China's Cabinet, issued a reform plan for the table salt monopoly system, and the NDRC's move is part of that.

Yet while many have expressed their support for the move, some are unhappy with it, because the reform is not what they expected. They say the ongoing reform is too conservative, as it does not break the monopoly but instead aims to "improve" it..

This argument is understandable, but it is too early to conclude that the reform is too conservative. The biggest problem with the salt monopoly is the bureaucracy, namely the salt bureaus playing the dual roles of both government departments and commercial companies. In other words, they profit from the market, while also supervising and regulating it.

The salt bureaus decide the price of salt, which means they can obtain salt from producers at very low prices and then sell it to consumers at very high prices, thus making undeserved profits. They also divide the national market into smaller sections and they have power to penalize restaurants who buy cheaper salt from outside the region in which they are located.

By allowing salt producers to set their prices according to market forces, the NDRC has deprived salt bureaus of their power to set the price of salt, which is a good start to market-oriented reforms.

Besides, there is a good reason for not breaking the table salt monopoly: Table salt monopolies are not necessarily evil; they take extra profit, but they also ensure the quality of salt products. If the reformers simply break the monopoly system immediately, that might affect the quality and supply of table salt.

Table salt is an essential part of the domestic food industry, and we hope the reform will proceed smoothly.