All you need to know about former CSRC head’s new department: China’s supply and marketing cooperatives

By Zhao Juecheng Source:Global Times Published: 2019/1/27 14:38:39

A worker shops at a store of a grass-roots supply cooperative in Rizhao, East China's Shandong Province in June 2016. Photo: VCG

Liu Shiyu, the former head of the China Securities Regulatory Commission (CSRC), who was replaced by the governor of Industrial and Commercial Bank of China Yi Huiman on Saturday, will serve as the deputy Party secretary of the All-China Federation of Supply and Marketing Cooperatives (ACFSMC).

Established in July 1950 and led by the State Council, China's cabinet, the federation is a syndicate of grass-roots supply cooperatives, called "gongxiaoshe" in Chinese. The total sales of China's cooperatives totalled 5.9 trillion yuan ($0.87 trillion) in 2018, according to the official website of the federation. That number was more than the twice Sinopec Corp's entire 2017 turnover. 

Born almost at the same time as the founding of the People's Republic of China, the cooperative was indispensable in every village and township during the era of the planned economy. Villagers used to buy agricultural fertilizer and daily necessities at the cooperatives, as well as fuel, rice, cooking oil or salt.

As a state-run "supermarket", the cooperatives were bustling at that time. Customers could buy everything there: alcohol for father, clothes for mother as well as candies or pencils for children. 

The cooperatives became very significant for farmers' lives and production, as the main channel of goods and commodity circulation in Chinese villages. 

In late 1980s, China's planned economy was moving toward the socialist market economy thanks to reform and opening-up. The federation began to wane and people made derogatory comments to describe the department: "A glimpse of a large courtyard and shabby houses you could tell it must be the supply cooperative."

With the growing and flourishing retail stores in 1990s, many "gongxiaoshe" encountered the problem of insolvency, break up and collapse. However, many elderly farmers in China still held a good impression about the supply and marketing cooperatives, and referred to "buying stuff in stores" as "going to the cooperatives", even until today.

In 1995, China's authorities called for reforms of the cooperatives and recovered the ACFSMC. As of January 2018, more than 10,000 cooperatives had been recovered and the total number of grass-roots supply cooperatives reached 30,000. Its coverage rate across villages and townships rose from 56 percent in 2012 to 95 percent in 2018. 

The major purpose of ACFSMC is to serve Chinese farmers in rural areas. Moreover, China Co-op Group under ACFSMC and its subsidiary corporations are very important for China's agriculture industry. For example, China National Agricultural Means of Production Group is the largest export trader of China's fertilizer and China's Recycling Development Corp is the largest recycling company in the nation. 

In addition to agriculture, the business scope of ACFSMC and its companies has expanded to logistics, chemical industry, real estate, finance and tourism. 

Posted in: ECONOMY

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