Chinese language - Market rules?should be?followed

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BIZCHINA / Review & Analysis

Market rules?should be?followed

(China Daily)
Updated: 2007-09-12 13:49

Local officials should respect the rules of the market and regulate the
economy accordingly, says an article in China Economic Weekly. The
following is an excerpt:

When the price of pork kept increasing, officials of the commerce
department in Chongqing worked out a countermeasure last month with a
union comprising 11 supermarkets that have 151 outlets across the city.

The union agreed to sell pork below the market price, in fact at zero
profit. And the commerce department asked the union to maintain it until
there was a decrease in prices.

Regretfully, the union has been reportedly broken its undertaking.

The incident is a natural result of the market economy.

The supermarkets are entities pursuing profits. They have costs like
salaries bank loans, taxes, and equipment maintenance. All these costs
must be covered by the return from their businesses.

Supermarkets are in the business of selling, to make a profit and cover
their expenditure.

It is against the basic rules of the market economy for administrative
departments to ask supermarkets to sell pork at zero profit. Such a rule
is destined to fail at the outset.

The union obeyed the commerce department, most probably, out of fear. It
soon found the decision to be costly, and its only option was to withdraw.

It is understandable that Chongqing's commerce department was eager to
bring the price of pork down, but its move was obviously not in
accordance with the rules of a market economy.

To manipulate commodity prices is strictly forbidden by law.

When the Chongqing commerce department asked the supermarkets to sell
pork at zero profit, it committed such a violation.

The collusion affected market order, the interests of pork retailers and
the rights of consumers by attempting to establish a monopoly.

(For more biz stories, please visit Industry Updates)

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