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China plans to scrap its state monopoly on the sale of salt, marking the end of a system with nearly 2,700 years of history. The move is intended to bolster competition, the Beijing Youth Daily reported, citing the Ministry of Industry and Information Technology.

China’s economic planners have tried for years to eliminate the monopoly, but faced opposition from the China National Salt Industry Corporation, the state-owned agency that controls salt distribution, and from consumers concerned about prices and food safety.

A monopoly on salt production was introduced as early as 685 B.C. in the state of Qi on the Shandong Peninsula, though it may have existed even earlier than that, the scholar Rowan K. Flad writes in “Salt Production and Social Hierarchy in Ancient China.”



Under the system, the government designated who could produce salt, and the shipping of salt outside authorized districts was banned. The salt trade was long a significant source of revenue for the state, and helped provide revenue and pay for troops in far-flung outposts of the Chinese empire.

As China has industrialized, the contribution of the salt monopoly to overall tax revenues has greatly diminished, but it has still served important functions. As recently as the mid-1990s, China experienced widespread problems of preventable developmental disabilities because of a lack of iodine in children’s food supply. In 1995, the country mandated that edible salt be iodized to reduce the problem, and the salt monopoly was used to enforce that rule.

Studies have found a significant reduction in levels of iodine deficiency since the requirement was put in place.

Consumers have long complained about efforts to end the salt monopoly. When a proposal was put forward to eliminate the system in 2009, the central government backed down in the face of online opinion surveys that showed a majority of respondents wanted the government controls to remain in place, the China scholar James Reilly wrote in his 2011 book “Strong Society, Smart State.” Those concerns have revived again, as online comments have raised concerns about the inclusion of toxic industrial salts being mixed with edible salt, the magazine Foreign Policy has noted.

Some scholars have argued that the state monopoly system actually contributed to the phenomenon of tainted salt, and that overhauling the system while enforcing food quality laws should help improve safety. In a 2010 paper, Sun Jin, Fan Zhou and Qin Li of Wuhan University noted that the monopoly meant that the price consumers paid for salt was three to four times higher than the price the China National Salt Industry Corporation paid for salt from authorized producers.

While the average consumer does not feel the price difference because salt makes up such a small portion of a typical grocery bill, the markup supports a vast and pernicious underground market, the authors wrote. Such salt often does not contain iodine and can have harmful impurities, they noted.

Likewise, the hefty profits create ample incentive for corruption, as companies within the system try to maintain their protected position, the Wuhan University scholars wrote.

“Because of legislative omissions and gaps in enforcement, salt monopoly has led to rent seeking, hidden food safety dangers and other forms of malpractice,” they wrote. “Reforming the monopoly should help reduce these behaviors.”