[Finance and Business World]Why do the people panic when the supply and marketing cooperatives return strongly? | State-run canteen | Planned economy

[Epoch Times, November 5, 2022]After the end of the 20th National Congress of the Communist Party of China, China is now running back to the planned economy. Not only are all parts of the country speeding up the restoration of the supply and marketing cooperative system, but even the A-share market has begun to pursue “supply and marketing” Social Concept Shares”. In addition, the construction of state-run canteens in various places is also accelerating, and some have already opened for business. So, why can supply and marketing cooperatives and state-run canteens that have been out of the public eye for decades return to the spotlight overnight? What is the CCP trying to achieve by reverting back to the planned economy with such a big fanfare? Let’s talk about that today.

Let’s take a look at the situation of supply and marketing cooperatives. During this period, “supply and marketing cooperatives” are making a strong comeback in various parts of China.

“Hubei Daily” mentioned in a report on October 11 that the “rehabilitation and reconstruction project of grassroots social organizations” implemented in Hubei Province has achieved phased results. By the end of 2021, the total number of grassroots cooperatives in the province will reach 1,373, basically achieving full coverage of townships. At present, there are 452,000 members of grass-roots communes, of which the number of peasant members has increased by more than five times in five years, from 51,500 in 2016 to 333,000 in 2021. The relevant person in charge of the Hubei Provincial Supply and Marketing Cooperative also stated that it is necessary to strive for 1.5 million members of grassroots cooperatives in the province by 2025.

In fact, not only Hubei Province, but also supply and marketing cooperatives all over China are developing rapidly. For example, the Ningxia Daily reported that the coverage rate of grassroots cooperatives in townships and villages in Ningxia increased from 56% in 2017 to 92.7%. It is expected that by the end of this year, the coverage rate will reach more than 95%.

To vigorously develop supply and marketing cooperatives, of course, it is necessary to recruit more staff. It can be seen that on October 26, the All-China Federation of Supply and Marketing Cooperatives issued a notice on the recruitment of civil servants on its official website, which also shows that this “supply and marketing cooperation” The Headquarters is an institution directly under the Central Committee of the Communist Party of China and a ministerial-level unit of the state. According to the National Civil Service Bureau of the Communist Party of China, the Central Committee of the Communist Party of China and its directly affiliated institutions issued the 2023 Civil Servant Recruitment Guide on October 24, the All-China Federation of Supply and Marketing Cooperatives, a total of 9 positions were recruited, of which 7 were required to be members of the Communist Party of China , settled in Xicheng District, Beijing.

In addition, on mainland social media Weibo, such as the official accounts of the governments of Zhejiang, Guangdong, Jiangsu, Hebei, Anhui, Sichuan, Guizhou and other places, recruitment advertisements for supply and marketing cooperatives have also been released.

The “hotness” of the supply and marketing cooperatives has also burned the mainland stock market. You see, in the bleak A-share market, the most popular stocks recently are neither the technology sector, the military sector, nor the real estate, finance, energy, and environmental protection sectors. It is the concept plate of supply and marketing cooperatives.

On November 1, the supply and marketing cooperatives sector surged by more than 8%, and many listed companies controlled by or participated in the system of supply and marketing cooperatives rose by the daily limit. On November 2, there were a number of concept stocks of supply and marketing cooperatives, which soared by more than 5%. As of the close on the 2nd, the A-share Wind Supply and Marketing Cooperative Index has risen by more than 10% in the past 5 days. Among them, Swan, a listed company controlled by Shandong Supply and Marketing Cooperative, has risen by the daily limit for three consecutive trading days, with a cumulative increase of more than 30%.

At the same time, with the high-profile return of the supply and marketing cooperatives, there are also “state-run canteens”. The so-called “state-run canteens” mainly refer to low-cost small and medium-sized canteens established in grass-roots communities in China.

What does this kind of canteen look like? Let’s take a look at a video on the Internet.

Fengqing is a county seat in Yunnan Province. It can be seen that the people in the film are quite excited to introduce that the food is very cheap, 2 yuan for a bowl of vegetarian dishes, and 5 yuan for a bowl of meat dishes. This scene, in a trance, seems to have traveled back to the era of uniform distribution of materials. However, the netizens who watched the film were very sober, and they all left messages saying, “There are times when you cry.”

According to Lu media reports, in July, some residential communities in Yunnan, Hunan, Hubei, Shandong and other provinces have begun to have buffet-style community cafeterias. The business model is funded by the local street office, and then operated by officially approved catering operators, with prices slightly lower than those in the market.

Moreover, it is foreseeable that in the future, various localities will accelerate the construction of such a batch of community-based “state-run canteens”. Because on October 9, the General Office of the Ministry of Housing and Urban-Rural Development of the Communist Party of China and the General Office of the Ministry of Civil Affairs just issued a “Notice on the Pilot Work of Complete Community Construction”. , to carry out a complete community construction pilot, specifically, to build convenience stores, canteens, vegetable shops, barber shops, laundry shops, as well as pharmacies, maintenance points, mail delivery services, housekeeping service outlets and other convenient commercial service facilities.

As we all know, in 2015, the CCP had begun to restore supply and marketing cooperatives in rural areas, and now, it has further expanded to cities, and has also begun to carry out “trials”.

Mainland people panic

However, the comeback of supply and marketing cooperatives and state-run canteens has made many mainland people feel panic and uneasy, because these two scenarios, once again, have brought the Chinese back to the unforgettable era of planned economy. For someone born before the 1960s, that’s a pretty painful memory.

From 1950 to 30 years before opening to the outside world in the 1980s, the CCP controlled the production and supply of all materials in Chinese society by relying on administrative planning. All households had to purchase daily necessities through supply and marketing cooperatives. Or the products produced by the family workshops must also be sold to the designated supply and marketing cooperative system, otherwise, they may be charged with “speculation”.

Beginning in 1953, the CCP government implemented a planned grain purchase in rural areas and a quantitative rationing policy in cities, referred to as unified purchase and sales. Because of the scarcity of materials, the main necessities of life for the Chinese people need to be supplied with tickets. You can only buy as many “tickets” as you are allocated, such as food stamps, oil stamps, meat stamps, cloth stamps, etc. It is a special product of the era of the CCP’s planned economy.

If we go back to the model of unified purchase and sales and quantitative distribution now, we will undoubtedly be driving backwards. Therefore, some netizens said that they recalled the poor years of the past when they recalled the soul of the current supply and marketing cooperative. Some netizens also worry that if the supply and marketing cooperatives supported by the state continue to expand, private small supermarkets, small community stores, and even large supermarkets may be squeezed out of the market, creating new monopolies.

However, the harm of the supply and marketing cooperatives and the unified purchase and sale system is far more than that. It is also the main culprit of the great famine that began in China in the late 1950s.

The great famine that started in China in 1959 killed tens of millions of people in a few years. Song Yongyi, a well-known scholar, said that the cause of the great famine was the Korean War in the early 1950s, unified purchasing and marketing, and agricultural cooperation. The food policy formed in the process of transformation. In addition, the CCP’s efforts to develop “people’s communes”, “cooperatives”, and “big canteens” are also the reasons for the famine.

Therefore, when the supply and marketing cooperatives and state-run dining halls, the two symbols of the planned economy era, reappear, how can they not trigger the fears of the Chinese people? Maybe older Chinese people still remember that at that time, if someone opened fire to cook, someone might move a stone and run to that house and smash the pot. The Chinese countryside was completely destroyed. Therefore, what people are afraid of is not only facing the lack of materials again, but more afraid of the “Great Leap Forward, Rectification, Suppression of Rebellion, Four Cleansing, Cultural Revolution” and other movements, which have also revived together with the planned economy.

So, why did the CCP “uniform purchase and sales” in those days? The main reason is to solve the problem of serious shortage of food supply. The reason is that in June 1953, a serious mass protest broke out in Henan due to the lack of food, so at the end of that year, the CCP began to implement the “planned purchase and planning” Supply” policy, the scope of unified purchase and sales has gradually expanded.

For the details of this history, if you are interested, you can refer to a program we did on July 2 last year, “[Financial Business World]Supply and Marketing Cooperatives Resurrection to “Prepare for War and Famine”? “.

Supply and Marketing Cooperatives have never disappeared, and their development has accelerated in recent years.

However, in the 1980s, seeing that China’s economy was about to be tossed to a complete end, the legitimacy of the CCP’s governance was also facing a crisis, and the CCP had to carry out the so-called reform and opening up. As a result, various individual and private shops gradually emerged, materials began to be abundant, and transportation was also With the gradual formation of a unified national market, the supply and marketing cooperative system has gradually faded out of people’s vision.

However, the product of this planned economy era has never disappeared, and most of its subordinate enterprises focus on circulation, logistics and other fields.

In February 1995, the CCP issued a “Decision on Deepening the Reform of Supply and Marketing Cooperatives”, which clearly mentioned that the All-China Federation of Supply and Marketing Cooperatives should be restored and put forward some specific support policies. As a result, the All-China Federation of Supply and Marketing Cooperatives has established the attributes of a ministerial-level unit.

In November 2009, the Communist Party of China issued a “Several Opinions of the State Council on Accelerating the Reform and Development of Supply and Marketing Cooperatives”, marking that the supply and marketing cooperatives have entered a new stage of so-called reform and development. In 2011, the All-China Federation of Supply and Marketing Cooperatives initially established an operation and service network covering the county, township and village levels.

Since 2013, supply and marketing cooperatives have been written into the No. 1 document of the Central Committee of the Communist Party of China and the “Government Work Report” many times. In 2021, the Communist Party of China once again clearly proposed to deepen the comprehensive reform of supply and marketing cooperatives, and carry out a comprehensive cooperation pilot of the “three-in-one” of production, supply and marketing, and credit.

Today, the supply and marketing cooperative has become a veritable big brother in the field of agricultural circulation in China. In 2021, the entire system of the supply and marketing cooperative will achieve a total sales of 6.26 trillion yuan, a year-on-year increase of 18.9%, which is more than twice the revenue of PetroChina in that year. The total sales include the sales of agricultural products, daily necessities, etc., as well as the turnover of the logistics industry, etc.

Moreover, in 2011, China Supply and Marketing Group ranked 83rd among China’s Top 500 Enterprises and 31st among China’s Top 500 Service Enterprises with an operating income of more than 96 billion yuan.

Professor Hong Tao, director of the Institute of Business Economics of Beijing Technology and Business University, mentioned in an interview that there are currently 31,000 supply and marketing cooperatives in China, with nearly 400,000 outlets, and China Post, China Telecom, and different economic sectors. The outlets form vertical chain relationships such as industrial chain, supply chain, and value chain, and at the same time, various types of horizontal ecological chain relationships are also formed.

Why is the CCP’s claim untenable?

It is worth noting that, with the re-emergence of supply and marketing cooperatives and state-run canteens, the relevant discussions are becoming more and more lively, but the mainland media have borrowed the words of experts to deny that China will return to the planned economy.

Their reason is that the current supply and marketing cooperatives are no longer a product of the planned economy in the traditional sense, and each invested enterprise adopts a market-oriented and modern enterprise operation mode to participate in market competition.

In addition, the service items of supply and marketing cooperatives have also undergone great changes. Today’s supply and marketing cooperative services also include “nanny-style” and “menu-style” land custody services to help farmers solve the problem of decentralised operations; there are also agricultural science and technology “going to the mountains and the countryside”, which integrates drones, green biological pesticides, etc. Emerging technologies have also been introduced to farmland and so on.

But in fact, this argument is untenable. Because, whether it is the change of ownership structure or the expansion of service scope, these are only superficial changes. In essence, there is no difference between the current supply and marketing cooperatives and the previous ones.

First of all, supply and marketing cooperatives are not products of the market economy. If it operated according to the laws of the market, the supply and marketing cooperative system should have disappeared from the land of China long ago. The reason why it can “resurrect” is precisely the result of the leadership and intervention of the CCP authorities.

Second, it is an institution supported and established by the government, and it undertakes political functions. On the official website of the All-China Federation of Supply and Marketing Cooperatives, it is mentioned that the responsibilities of the Federation of Supply and Marketing Cooperatives include guiding the development of national supply and marketing cooperation; according to authorization, organize, coordinate and manage the management of important agricultural production materials and agricultural and sideline products. Wait. It can be seen that the role of administrative intervention is very obvious.

Third, the current supply and marketing cooperatives are still a system used by the government to allocate resources, and are fully involved in rural economic activities from the perspectives of agricultural materials, land, finance, and marketing. Compared with the past, the control of resources is more comprehensive and in-depth.

But the question is, why did the CCP establish such a system?

Judging from the current situation, the CCP’s real goals are nothing more than two: one is to implement a comprehensive state monopoly on resources and strengthen the party’s control;

First of all, the CCP can squeeze the living space of small private enterprises, vegetable markets, and restaurants through state-owned enterprises such as supply and marketing cooperatives and “community canteens”. economic crisis occurred. Because once the economy collapses, a comprehensive social crisis will break out. The CCP can only use supply and marketing cooperatives and large canteens to stabilize the society through rationing.

Moreover, the CCP has already proposed to build a unified large market across the country, and to “unify” market prices, commodity supply, distribution channels, etc. In fact, it is to engage in “national supply and marketing cooperatives” and “unified purchases and sales.” The purpose is, on the one hand, to Strengthening domestic control, using super-large central enterprises established in various industries to control the entire country; on the other hand, trying to use the super strength of these enterprises to compete for bargaining power internationally.

Secondly, the latest measures of the CCP also show that as Sino-US relations continue to deteriorate, the CCP is ready to break with the West, and the risk of conflict in the Taiwan Strait is increasing. In addition, China is currently facing an economic recession. In times of economic crisis, supply and marketing cooperatives and “state-run canteens” can be used as a means of adapting to allocate materials and manage communities, and to a certain extent, play a role in stabilizing the society.

It is foreseeable that in the near future, the market economy will give way to the planned economy, the era of material scarcity will return, and the days of supply by ticket will follow. In fact, the CCP authorities have already hinted with great fanfare before that the Chinese people will live together in misery.

Institute of Financial and Commercial Economics
Planning: Yu Wenming
Written by: Li Songyun
Editor: Wei Ran, Yu Wenming
Edit: Song
Producer: Li Songyun
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