Chengdu salt prices quietly rise, salt industry system reform may break the deadlock

More than 4 months after the Ministry of Industry and Information Technology confirmed the news of canceling the state salt monopoly, unusual movements have appeared in the market retail price of salt. Recently, an Economic Observer reporter learned exclusively that salt prices at major supermarkets in the Chengdu area have been quietly raised.

Economic Observer reporters visited major supermarkets in Chengdu, and the news was confirmed by supermarket staff. According to them, the price of 250 g/pack salt rose by 0.5 yuan/pack to 1 yuan/pack, from the original price of 2 yuan/pack to 2.5 yuan/pack—3 yuan/pack.

Several staff members said, “The price adjustment began as early as half a month ago, and the extent of the increase varies with location; suburban areas are generally higher than the urban area.”

A senior executive of a chain supermarket in the Chengdu area who declined to be named denied that this price increase was led by supermarkets. The executive stressed, “Salt is a commodity controlled by the state. Although it was said last year that the monopoly would be canceled, the policy has not yet landed after all, so it is impossible for supermarkets to raise prices without authorization.”

However, the above supermarket staff member revealed, “Accompanying this round of price adjustment is a change in salt varieties, upgrading from the previous ordinary salt to the current refined pure salt.”

Sichuan Jiuda Salt Industry (Group) Company is located in Zigong City, Sichuan Province. It is China's largest well and rock salt enterprise group and one of the main suppliers of salt in Sichuan. An insider at the company told Economic Observer reporters, “The company indeed began adjusting its product structure this year, and in terms of terminal sales prices, it has also adjusted prices according to different medium, high, and low price levels; some prices have indeed been raised.”

A source close to the Sichuan salt industry management department told Economic Observer reporters, “Since relevant state departments confirmed last year that the salt monopoly would be canceled, many salt companies in Sichuan began brewing adjustments to their product structure and business policies. The current increase in market salt prices fits this logic.”

In November last year, the Ministry of Industry and Information Technology disclosed that it was stepping up research and formulation of a salt industry system reform plan. The overall direction of the salt industry system reform is separation of government and enterprise, and cancellation of the salt monopoly. And “liberalizing salt prices and matching products according to market demand” is seen as the key to the success of salt industry reform.

Some media also cited an insider at the China Salt Industry Association as disclosing that the seventh version of the salt industry system reform plan has now been approved by relevant ministries and commissions. The new plan consists of six parts, including abolishing the salt monopoly and improving the salt reserve system.

Public information shows that after China joined the WTO, only tobacco and salt were subject to monopoly. In 2001, China began promoting salt industry system reform. As of 2008, from the initial Salt Management Office of the State Economic and Trade Commission to the salt circulation system reform plan proposed by the Industrial Department of the National Development and Reform Commission, different ministries and commissions proposed 5 salt industry system reform plans, but ultimately, for various reasons, no final draft was formed.

At the end of September 2014, Wang Qiang, deputy director of the System Reform Department of the National Development and Reform Commission, stated publicly that “China's salt industry system reform is imperative.”