Friday, September 2, 2011

Government Pork Shops Revived

In the bad old days of the centrally-planned economy, China's urban residents bought basic food necessities from State-run shops at cut-rate prices using ration coupons. The state-run shops have been in mothballs for nearly 20 years now, but some Chinese officials are setting up something similar in a desperate attempt to control food price inflation.

The red banner: "Guigang City Government Limited Price Pork Sanhe Market Sales Outlet"

News articles this month report that a number of cities have opened food shops that sell discounted pork and cooking oil (限价猪肉,食用油销售点). In Guigang, a small city in Guangxi Province, the city government has opened 13 discount pork shops and 6 discount sales points for cooking oil. These shops or sales counters sell government pork--probably from city reserves--at low prices as a strategy of bringing down high market prices for pork.

A reporter in Guigang found a discount pork shop next to one of the city's food markets. It was a pork shop with a sign hung over the door that read, "Guigang City Discount Pork Shop," with 10 or 20 customers buying pork.

The news articles report these shops are being opened in Guangxi and Hainan, and there are a few in Beijing too. Most of the sales points are set up in supermarkets, but some are adjacent to wet markets. Guigang officials say the discount sales are mainly through supermarkets because they are more honest than wet market vendors and they keep records of purchases and sales.

Customers can buy pork or oil at roughly a 10-percent discount. Customers must register (one article reports that the customer must have a residence registration in the city). Then they receive a ticket that they can present to purchase up to 1 kilogram of pork per day.

A worker said the Guigang shop bought two discount-price hog carcasses (about 150 kilograms) that sold out in two hours. The next day the shop bought four hogs that sold out by 10 am. The vice-director of the city commerce bureau says that the city plans to sell 100 discount-price hogs daily, one-fifth of the city's daily supply.

Vendors in the nearby market said the shop was affecting their business. The reporter said vendors had cut their prices by 1 or 2 yuan. Similarly, in a supermarket where discounted oil of certain brands was available, other brands were also on sale with discounts of 7 or 8 yuan per five-liter bottle.

Most of the articles on these shops are propaganda. An article from Danzhou of Hainan Province reports that city residents can't find any discount-price pork to buy. The wet market's three discount-pork sales counters had disappeared and the sign had been removed. A vendor said they had received a notice at 8 am ordering them to stop selling discount pork. The vendor was puzzled, since the government announced in July that sales of discounted pork would continue for two months.

Shoppers in the Danzhou market were also puzzled,but less concerned about the disappearance of the discount pork. One shopper wondered why the sales had been discontinued since pork prices had not gone down yet. However, shoppers also noted that the "discount" pork was actually no cheaper than other pork. A supermarket manager said sale prices on their pork were cheaper than the government's "discount" pork prices.

An official from the local commerce bureau said the program was planned for two months, but they stopped sales of discounted pork for three days to see what would happen. There was no change in the market. They decided to stop the program.

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