I got up at 6 AM this morning to attend the driving road test.
Actually I have a Chinese driver's license
However, I must take two tests to get a Japanese driver's license.
The written test and the road test
I passed the written test months ago
and made an appointment for the road test this morning
I heard the road test is quite difficult to pass
Many people even take ten trials and still don't pass
The longer you drive in China, the harder you pass the test
Instead, it's easier to pass for a beginner
So I practiced for 4 hours yesterday in a driving school
The instructor told me to correct various driving habits in China
And I went for the road test today.
Altogether there were five Chinese to attend the test today
Unfortunately, I failed very soon after I started my test
Only one Chinese out of five passed today's test
So the pass rate is pretty low
I made another appointment for road test in two months
Therefore, I arrived at home quite early at around 1 PM
We can continue our Wang Sir's News Talk today
What is the topic today
I received PMs and emails for the past few days
saying "Sir Wang, can you comment on
China's supply and marketing cooperatives?"
Domestic media have been reporting that
the grassroots are rebuilding supply and marketing cooperatives
Does this mean that China will go back to Large Collectives
Think about what Supply and Marketing Cooperatives is
It is associated with People's Commune done by Mao Zedong
What does it mean to rebuilt this
Many overseas media are interpreting this way
Even lots of YouTubers are saying the same
Let's talk about this topic today
First of all, I think the concerns maybe result from
what's happening in China these recent years
Why
First, it gave us the impression of
the Nation Advances, but the People Fall Behind
The golden age of the private economy is gone forever
It gives the impression that state-owned enterprises
and state-owned capital are re-entering in many fields
This is indeed an objective fact
Secondly, it is because of 20th NCCPC
Everyone knows that in 20th NCCPC
Xi Jinping broke the rule set by Deng Xiaoping regarding
10 years' term and power transfer to next leader
However, Xi Jinping continued in power after 10 years
How do people think of this
This is like Mao Zedong, isn't it
Since it's been done politically like Mao
why can't it be done economically as well
Economically, it can also go back to the past People's Commune
and the Supply and Marketing Cooperative
So many people have this concern
Personally I think these concerns make some sense
However, it is not likely to happen
Why
I think for the whole CCP, there is actually
such a consensus that the Large Collectives Planned Economy
that Mao did in the past has no future
Nothing good for China
Neither for CCP
Think about the 30+ years' Close-Door Diplomatic Policies by Mao
People couldn't get enough to eat due to the messy economy
Is it good for CCP to govern the country? Not at all
So Reform and Opening Up policy is good for
both economic development and CCP's rule
So that CCP can implement crony capitalism and power capitalism
So it is no way to go back to the Planned Economy
You can check the special supply system I talked earlier
Senior CCP officials enjoyed the special supply at that time
But to be honest, those special supplies are
not much different from what ordinary Chinese people enjoy today
They just had special powers that other people couldn't enjoy
But the absolute standard of living was actually very low
Just look at Kim Jong-il, Kim Jong-un and their families
From the reports I read
the supplies enjoyed by their senior cadres
are not as good as that of ordinary Chinese people
Why
Because the production capacity is too low to cause material scarcity
Benefited from the market economy, ordinary people can
enjoy a better life than the North Korean senior officials
Clearly, CCP knows this
The other reason is the benefits of crony capitalism
CCP members are getting very rich
Think this way. In Mao's time, the CCP officials enjoyed privileges
but they couldn't make a fortune at all
Especially their families and children couldn't make a fortune
Think about the market economy
especially the dual-track price system implemented later
How many children and families of the CCP had made a fortune
Now in USA, there live many dependents
of 2nd & 3rd Generations of Red Families
who are actually the beneficiaries of the market economy
Can they get rich without the market economy
Of course not
Thanks to the market economy, they made lots of money
So, they are not willing to go back to the Planned Economy
Therefore, CCP is unlikely to re-implement the planned economy
whether for themselves or for the public
So if that's the case
why are they rebuilding the supply and marketing cooperative
Let's talk about it today
First, let's review the history of supply and marketing cooperatives
After CCP founded PRC, they started to promote socialism
Socialism also means planned economy
Under the planned economy system
commodity trading and circulation are divided into three sections
Import and Export Section、Urban Section and Rural Section
which were operated by three main bodies respectively
For import and export section: is the foreign trade systems
All import and export business must be through foreign trade companies
Then, foreign trade companies can do business with foreigners
For the urban section, the main body is the commercial department
Under the commercial department, there are commercial bureaus
Under commercial bureaus there are department stores
Older people should have some impression of this
There were may department stores in every city
The supply and marketing cooperative is for the rural section
The core of the planned economy is unified purchase and sales
This means no one can buy or sell except the specified bodies
For example of the supply and market cooperatives in rural areas
In the villages, the common miscellaneous goods
fruits, and means of daily production
were all sold by the supply and marketing cooperatives
Anyone else were not allowed to sell the commodities
To open a small shop would be called speculation and profiteering
During the Cultural Revolution or before the reform and opening up
it was a crime
If you increase the price to sell a product, this is also crime
So what is the core? The monopoly
This means only I not anyone else can sell
This is the core of ​​supply and marketing cooperatives
as well as the planned economy
The supply and marketing cooperatives are divided
from nation-level China Supply and Marketing Cooperative
to the provincial-level provincial cooperatives and all the way
to counties, towns and villages across the whole country
The system began to have corporate entities at the provincial level
but not at the national level
Provincial-level companies are generally divided into 8 domains
including local products, daily miscellaneous products, fruit products
tea, hemp, cotton, agricultural materials, storage and transportation
Fruits for selling fruit
while agricultural materials for selling pesticides and fertilizers
Cotton is for selling and buying cotton
Basically, its business strategy is sale in short supply
It means to buy in the off-season and sell in the peak season
Products are distributed considering the whole country
This is the previous supply and marketing cooperative
I still have some impression
As a child, I lived in a county town
This kind of county is different from big cities
The county town generally has a Chengguan town
which belongs to the rural system
So, there are both department stores
and supply and marketing cooperatives in the county
In my childhood, my mother asked me to buy soy sauce and vinegar
I went to the supply and marketing cooperative to buy them
Since there were some in bulk to sell
you just need to take a bottle and get some by a jar
Five cents can buy a bottle of vinegar or soy sauce
This was what I did as a kid
Also, we bought fabric to make clothes at that time
The new clothes were not affordable with only few varieties
So few people went to buy in department stores
For Chinese New Year, you can buy fabric to make clothes at home
This was the case when I was a kid
The fabric was bought at the supply and marketing cooperative
Everyone was given tickets based on the planned distribution
A person can only buy a few feet per year
Everyone saved up for one year to buy fabric to make new clothes
This is the supply and marketing cooperative system at that time
There are eight basic domains across the country
After the reform and opening up
the supply and marketing cooperatives began to change
Everybody knows that
China's reform and opening up started from the countryside
The core is to loosen and decentralize power
In the past, farmers farm land under collective ownership
How much work you did or
how the harvest was doing has nothing to do with your income
You could only earn Gongfen, i.e. credits
The initial reform in countryside was joint production contracting
The land was still collectively owned, but you can contract it
The more grain you harvest, the more you have
So, farmers' enthusiasm was immediately mobilized
Since the reform and opening up
the No. 1 Central Document every year was about countryside
The core of rural policy is to decentralize powers continuously
At first, it allowed you to do joint-production contract
Next were for these supply and marketing cooperatives
These means of living and production
were gradually opened allowing others to enter
For example, fruits, in the past, could only be purchased
by supply and marketing cooperatives
Now the private enterprises were allowed to buy and sell
For stuffs like tea, cotton and linen, it's the same
The year of1985 was a turning point
In 1985, the No. 1 Central Document stipulated that
countrysides were liberalized except some special commodities
and there was no unified purchase and sale any more
This marks the entire rural society started the market economy
There was also a change in the system this year
The supply and marketing cooperative
merged with the city's commercial bureau
The planned economic system in which urban and rural areas
were divided into different categories and managed together
is basically going into history
However, the All China Federation of Supply and Marketing Cooperatives
i.e. ACFSMC, is still existing
Why
Because China joined the World Cooperative Alliance or ICA in 1985
ICA is quite famous and has members globally
In Japan, the Japanese Consumers’ Co-operative Union(JCCU)
and Japan Agricultural Cooperatives(JAC) are both ICA members
People who haven't been to Japan don't know this
As the cooperatives are in great demand from the society
they are actually very powerful in Japan
Such as JAC
Individual farmers are spread out all over
You have to buy agricultural products from JAC whenever needed
You can't buy from individual farmer directly
JCCU is the same which is a consumer Co-Operative
The consumers think that
there are way too many steps from producers to consumers
If we join together, can we do a better job
We can enjoy higher quality products
at a lower price at the same time
So the JCCU and JAC
are both formed under Co-Operative model.
There are similar organizations in many other countries as well
For example, China joined ICA as ACFSMC
So ACFSMC has to be existing
With that said, even ACFSMC collaborated with Ministry of Commerce
ACFSMC is still there
China is the council member of Asia Pacific ICA
It holds an executive position of the Asia Pacific region
However, the functionality of ACFSMC was gone
As China started opening up
The structure of ACFSMC has been collapsing gradually
Why
Because the previous China COOP system
doesn't have any experiences to deal with the market economy
It was structured under government leadership
You can imagine how the Planned Economy runs under such system
Very bad service attitude to the customers
No market operation awareness
So as soon as the private company sector was established
every market segment was overwhelmed once it opened up
The government found some issues in two areas after open to private sectors
One is cotton, and the other is agricultural materials
There were lot of low quality cotton products in the beginning years
after cotton industry opened to private companies
After the agriculture materials were opened to private companies
the market was filled with low quality or fake fertilizer and pesticide
So the government took these two areas
back to the Supply and Market Cooperative
This system continue runs for many years, including cotton
As we all know, the cotton company still exist
to manage the buy and sell of cotton
CCP considers cotton and agriculture material as strategic resources
So they can't be handed over to the market
They think the market will be messy without government control
The strategic resources must be controlled
That's why the Supply and Market Cooperative didn't disappear
Most of us may not know in the Supply and Market Cooperative system
other sectors gradually collapsed
When entering the 1990's of last century
the Supply and Market Cooperative also experienced
laying off, bankrupt and contracting, these kinds of things
Sme for the Department Stores under Commerce Bureau
At first, the stores in the city were just Department Stores
As the private supermarket grows, the Department Stores fades out
So the companies of countryside Supply and Market Cooperative,
like, Grocery, Fruit, Tea, Fiber, Local Product companies
were all gradually gone
In many places, contracting, lay-off or change to another job
was a typical scenario
But the entities were still there, no matter provincial or county level
Things changed after 2000
why
As known, the agriculture tax was canceled after Hu JinTao in power
Countryside got subsidiary when the government became rich
The budget for all kinds of projects was increased a lot
From subsidizing city by agriculture taxes
After the year of 2000
the policy switches to subsidize countryside from city taxes
One obvious example was the "Link All Villages Project" at that time
i.e. Roads, TV, Internets etc infrastructure construction for all villages
Followed by the "Home Appliance to Countryside" program
Those were all accomplished by the Supply and Market Cooperative
The Supply and Market Cooperative system has been changed
from an exclusive buy and sell organization to a platform of
to promote state projects in countryside
this happened after 2000
The Supply and Market Cooperative were very rich, a profitable job
Not long ago, it's very hard to find a job in Supply and Market Cooperative
You can control a huge budget
If you can't spend them all this budget year, it will expire
They will spend all their budget by all means
It definitely feels good to spend money
There are also a lot of interests in the process
The Supply and Market Cooperative appears normal
it is actually indeed a very very profitable job
So why it is trying to establish more local branches these years
I think there is one background
why
In China countryside, even the central government
tried to subsidize and invest more after 2000
However, there is still huge gap between countryside and city
It is still like an abandoned society
The abandoned society means there are no
comparative public services of the cities in the countryside
The police will come if you call 110 in the city
But in the rural areas, the policy won't come even you call 110
case was simply ignored at site
When I was doing interview at rural area before
The farmers were hurting each other
Someone run a fish farm while the neighbors went fishing there
After the owner complained, the fish pond was positioned
Certainly all fish died
You can't manage this
Even you report it, the police won't find you the suspect
They don't even file a case for it
In the countryside, there is no similar level of public service like cities
The service level of Police, Hospital, School are low
The production activity was at a primitive nature status in countryside
Because the "Undertake by Contract" in previous days,
made the farmers back to small family scale economy
The small scale family production before the PR China was established
The small family is facing a huge market alone. It brings a problem
A huge uncertainty
Since the price of agriculture produce fluctuates a lot
Like vegetable prices
It can vary 10 times between best and worst years
Some times 20 times
Say you grow garlic, this year is very popular,
the price is very high
Then everybody grows garlic next year
All garlic rotten in the field because no one harvest them
in the next year as a result
These phenomenon were very serious these years in the next year as a result
These phenomenon were very serious these years
So these form of nature economy
facing directly to the market. There were problems indeed
Anther issue is no one wants to stay in the countryside
Everyone goes to city due to urbanization
There is one slogan from the CCP in the recent years
"Revitalize China Countryside"
The intention is to gradually transform
the countryside toward urbanization
To provide countryside more convenient conditions
To extend common public service to the countryside
Also extend the city's intelligence toward countryside on the other hand
So the rebuild of Supply and Market Cooperative
should be related to this objective
Take a look at what the rebuilt of Supply and Market Cooperative is doing
Helping farmer to sell agriculture products
The Poverty Relief Platform are established in many places.
Such as 983 platform etc.
They are all trying to help farms selling agriculture products
As well as provide agriculture material, supply etc.
That's why I say the rebuild of Supply and Market Cooperative
It has nothing to do with previous Supply and Market Cooperatives
What is left is the just name
But back to the subject
Farmer's organization is indeed needed in the agriculture society
My real feeling, after I came to Japan
Compare with Chinese farmers, the Japanese farmers are
at much better condition. Why the condition of Chinese farmers are that poor
That's because of the powerful agriculture co-operatives in Japan
Such as JA group, they are very powerful
No one will sell you anything if you approach any individual farmers
You must do it through JA group
The farmers are only focus on farming, not selling at all
Can it be the future model of China
Or should it be like this? I think it should
But, Should the Co-operatives under government leadership
We can discuss it, and I don't think it should
By definition, the cooperatives should be organized by farmers themselves
i.e. the Non-Profit Cooperatives
But the CCP has always been very vigilant to civil society organization
Thus, when it sees the demand from the market
The CCP just introduced its Supply and Market Cooperative to take the lead
We are not sure whether it can be successful or not
In my own opinion, the recent initiative
the real motive is to fill the actual demand from the agriculture society
But why I say it is no longer the previous "Supply and Market Cooperative"
This supply and market cooperative
like I said at the beginning
the legacy Supply and Market Cooperative
What's is the core? It is exclusive franchise
i.e.Only I can buy and sell, not anybody else
You will break the law if you do so
Only I can, that's Monopoly, State Ownership
It is monopoly through exclusive franchise
No other people can compete with
It was the core of previous years
But now even the Supply and Market
Co-Operative system exists
But it is not exclusive
If you read from any levels of the CCP documents
Nothing about exclusive franchise was authorized
to recent Supply and Market Cooperative
For instance, you can buy produce from the farmer
But it doesn't restrict farmer from selling to others
You can feel free to buy and to sell
i.e. in this process
Whether the Supply and Marketing Cooperative
can survive and grow
It has to compete with other players in the same market
There is nothing to be worried about if
this competition situation is not changing
Our Supply and Marketing Coop will bring us back to the Mao Era
Going back to the "Large and Collective" days
Lastly, people lives outside china may not know
the exact situation inside China
Their understanding of inside China maybe just
base on those terminologies
the "Supply and Market Co-Operative" base on those terminologies
When they see Supply and Market Co-operative
They feel going back to the Mao Era soon
As a matter of fact, I don't like the CCP, either
But it is not necessarily as simple or low as you assume
Because if you see from the CCP perspective,
no matter from its self interest or governance Because if you see from the CCP perspective,
no matter from its self interest or governance
It will be hard for it to go back to the economy policy of Mao Era
i.e. Returning to the "Large and Collective
Supply and Market Co-operative " era
I think it is an over interpretation
English Subtitle: CA Labour & Motor Rider
Proofread: CA Labour & Motor Rider