China plans to scrap its state monopoly on the sale of salt, marking the end of a system with nearly 2,700 years of history. The move is intended to bolster competition.

A monopoly on salt production was introduced as early as 685 B.C. in the state of Qi on the Shandong Peninsula, though it may have existed even earlier than that. The salt trade was long a significant source of revenue for the state, and helped provide revenue and pay for troops in far-flung outposts of the Chinese empire.

As China has industrialized, the contribution of the salt monopoly to overall tax revenues has greatly diminished, but it has still served important functions. As recently as the mid-1990s, China experienced widespread preventable developmental disabilities because of a lack of iodine in children’s food supply. In 1995, the country mandated that edible salt be iodized to reduce the problem, and the salt monopoly was used to enforce that rule. Studies have found a significant reduction in levels of iodine deficiency since the requirement was put in place.

Some scholars have argued that the state monopoly system actually contributed to the phenomenon of tainted salt, and that overhauling the system while enforcing food quality laws should help improve safety. In 2010, the price consumers paid for salt was three to four times higher than the price the China National Salt Industry Corporation paid for salt from authorized producers. While the average consumer does not feel the price difference, the markup supports a vast and pernicious underground market, such salt often does not contain iodine and can have harmful impurities. Reforming the monopoly should help reduce these behaviours.