(Beijing) — China's domestic salt monopoly has existed far longer than the Great Wall, but its days are numbered.

The government has decided to abolish its millenniums-old control over edible salt on Jan. 1, as the country faces a glut of the essential mineral. The National Development and Reform Commission (NDRC), the country's top economic planner, made the announcement Sunday.

The new policy will allow companies to set wholesale and retail prices of salt and distribution channels with the aim of creating a more market-driven industry, the regulator said.

The industry has been controlled by the government in China since the middle of the Zhou dynasty in the seventh century B.C. and was once a key source of revenue for ancient rulers.

Due to the difficulty of extracting salt and its necessity to human life, salt in imperial China was so valuable that it was sometimes used as currency. Venetian explorer Marco Polo described in his travelogue about China in the 13th century that people in the southwestern part of the country "have none of the Great Khan's paper money, but use salt instead."

The Communist Party retained the national salt monopoly after it came to power in 1949 to ensure that iodized salt was part of the Chinese diet.

Under the current policy, only 300 companies in the country are licensed to produce salt and distribute it through state-controlled channels, according to the NDRC.

However, an uncompetitive market has caused an oversupply of salt. In 2015, 24.69 million tons of raw salt, the material for both industrial and edible salt, was wasted, accounting for a loss of about 20 percent of the total production, the NDRC said.

The country first eased its control on the industry in April by allowing edible-salt producers to sell bulk salt to non-government designated distributors. It also ended the policy that each distributor can do business only in certain regions of the country.

The NDRC said that the time is right for lifting salt-price controls, but that the agency will also ensure that the price will not fluctuate drastically and that it is still affordable to impoverished people in rural areas and during natural disasters.

Local governments will collaborate with companies to create a reserve that can provide at least one month's supply of salt, the NDRC added.

Contact reporter Chen Na (nachen@caixin.com); editor Ken Howe (kennethhowe@caixin.com)