State monopolies face a shake-up

Dismantling of 2,000-year-old table salt system signals further reform to lessen administrative intervention in the market

China is to end a monopoly over the production and sale of table salt, dismantling a system that has been in place in various guises for more than 2,000 years and run by a state monopoly since 1950. The disbanding of the salt monopoly will start in 2016 and be complete by 2017.

It is a good move that will further propel market-oriented reform. State monopolies are not necessarily evil; in certain industries they are needed to maintain the smooth running of the economy. For example, subway systems and water supply networks should be constructed by the State, because hardly any private funds could afford the costs or would be attracted by the low returns. These are what economists call natural monopolies and they apply generally to infrastructure construction, rare resources and industries of strategic importance.