AML Update: Salt Reforms

Sam Engutsamy, January 20 2010.

Having been operational for over 2000 years, China¡¯s monopoly on the sale and production of salt appears to be drawing to an end.

The National Development and Reform Commission (¡°NDRC¡±) are looking to submit proposals to the State Council to bring a conclusion to the two thousand year old monopolistic practice. The salt monopoly grew from the need to raise revenue from taxes, and to tackle the iodine deficiency in the populace¡¯s diet within certain areas of China.

China National Salt Industry Corporation, the largest producer and seller of salt for the last sixty years, has functioned as regulator under the NDRC¡¯s supervision.

Post AML enactment, there were concerns that the state owned enterprises (¡°SOEs¡±) provision found under Article 7, would allow SOEs to be exempt from the AML. This consequently led to concerns that the AML may, during its enforcement, be based upon a policy of protectionism. If the NDRC¡¯s proposals are approved by the State Council, it would endorse the AML¡¯s important, and equality, whilst at the same time set to rest any stakeholder worries. Additionally, such a move can only benefit China, as it continues in implementing a market economy.

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