Recently, the news that Master Kang, a mainland Chinese instant noodle brand, is about to raise prices across the board has surged in popularity. Despite mainland media seeking confirmation from the company and receiving “no response,” their online stores have stated they haven’t received any price increase notifications yet. However, distributors have already disclosed that prices will be raised in May, and employees at the Beijing branch have confirmed that the head office “has indeed issued a price adjustment notice to distributors.” Specifically, the suggested retail price for bucket noodles has been adjusted from 4.5 yuan to 5 yuan per bucket, an increase of 0.5 yuan; and the suggested retail price for bagged noodles has been adjusted from 2.8 yuan to 3 yuan per bag, an increase of 0.2 yuan. Even products manufactured after April 20 have already been labeled with the suggested retail prices of 5 yuan and 3 yuan on the packaging.
It seems that the price increase for instant noodles is imminent. For the Chinese, instant noodles and pickled vegetables are inseparable. Since a well-known pickled vegetable company in mainland China raised the prices of 7 products in November 2018, many Chinese people have been exclaiming, “Even pickled vegetables are becoming unaffordable.” By July 2019, the company reported that its stock price had plummeted, causing a market capitalization loss of 4.4 billion in just four days.
When it comes to the combined influence of power and capital, if the greens (common people) stop buying pickled veggies, it’s not a big deal. But as long as instant noodles remain an essential necessity for the greens, the harvest can continue. In reality, even before Master Kang instant noodles began a widespread price hike, many Chinese people could no longer afford them. Looking at the company’s sales performance in 2023, the entire instant noodle sector witnessed a 2.84% year-on-year decline, with high-priced and medium-priced bag noodles showing a 6.63% and 3.61% drop, respectively.
While the number of customers who can afford instant noodles has decreased, they have not disappeared entirely. Raising prices can help compensate for revenue shortfalls. Moreover, despite a 5-mao increase in bucket noodle prices in 2022, sales in 2023 still achieved a modest 0.09% year-on-year growth. In addition, instant noodles and others saw even more robust growth, reaching 28.75%. This illustrates that, according to Chinese eating habits and income levels, bucket noodles have become the top choice for satisfying hunger on the go, surpassing less essential bag noodles kept at home. As for instant noodles, they can even be considered a snack.
From the fact that the price increase for Master Kang bucket noodles is 2.5 times that of bag noodles, it is clear that the Communist Party of China has fully opened a precision mode for harvesting the greens. This precise harvesting was already hinted at when China’s high-speed railway system announced price hikes not long ago. An article published by Apollo News titled “New Regulations in Beijing Signal Danger! No More Greens Slipping Through the Cracks This Time” analyzed that the high-speed rail lines mainly affected by the price hike are the Wuhan-Guangzhou high-speed rail, Shanghai-Hangzhou rail, Shanghai-Kunming rail, and Hangzhou-Ningbo rail, passing through the economically vibrant Yangtze River Delta region and major labor-exporting central regions. The first and business-class seat prices increased by around 20%, and the business-class seats even saw a nearly 40% increase. The precision harvesting targeted the primary buyers of these three types of tickets, namely the construction industry workers, manufacturing industry workers, and middle to high-level white-collar workers.
Chinese people on trains love to eat bucket noodles, so if they are willing to buy expensive tickets, they certainly won’t skip the noodles. The scythe has tightly gripped the greens, so even during price increases, they are packaged as part of the deal. Now, with high-speed rail targeting first, second, and business class demanders, it is clear that general harvesting across all sectors and levels is becoming challenging. With stagnant land sales, a gloomy real estate and automotive market, and rising unemployment rates leading to reduced tax revenue, the only option is to find additional non-tax sources of income.
Today, the option of collecting fines seems to have hit a bottleneck. After all, fewer people are going out while more are choosing to stay idle. The government wants to impose fines but can’t find the opportunity. How to deal with this? The only option left is direct price increases.
Since the incident of gas meters being tampered with in Chongqing earlier this year, many people have suddenly realized that in the past six months, 125 cities and counties in China have issued notices of natural gas price increases. Regarding water prices, Shanghai had already increased them last year, with the highest tier seeing an increase of over 50%. Guangzhou followed suit with an increase of over 30%. Some provinces rushed to raise electricity prices by up to 30% before the summer season.
Chinese media have written, “In the future, prices of public goods will rise, including water, electricity, gas, public transportation, subways, trains…” When discussing the reasons behind this, the article mentioned that “for a long time, public costs have been subsidized by the government, but the government is struggling financially.” In fact, the Communist Party’s financial struggle is not only reflected in fiscal scarcity but more so from the central to local levels, with government entities, state-owned enterprises, and central enterprises carrying enormous debts.
It is worth noting that China’s vast infrastructure, such as railways and highways, has been built through borrowing money. However, after being put into operation, roads, high-speed railways, subways, and other infrastructure have been consistently running at a loss. Making enough money each year to cover interest payments is considered a success. Even though substantial amounts were borrowed from banks at the time, most of it went directly or indirectly into the pockets of the elite. Consequently, the projects funded by this money often turn out to be of poor quality (locally referred to as “bean curd residue”). Even today, the maintenance costs of infrastructure remain a significant expense.
Just as they pocketed bank loans shamelessly in the past, the way the Communist Party elites are dealing with government expenditure and debt issues is simple and crude: printing money and releasing liquidity to fill the gaps caused by their previous actions.
When the Renminbi depreciates, prices across China will inevitably soar uncontrollably. Official statistics from the Communist Party show that in March 2013, China’s broad money supply (M2) exceeded 100 trillion for the first time after 57 years. However, by January 2020, it surpassed 200 trillion in less than seven years, and by March 2024, it reached over 300 trillion in just four years and two months. Recently, there have been claims within China that, to manipulate liquidity without constraint, the Communist Party even changed the anchor currency for the Renminbi from the US dollar to national debt.
In fact, the debts of the Communist Party were caused by the greed of the elites, but it is not the corrupt officials who have to repay them; it is every Chinese citizen. The Communist Party has guns, so they are not afraid of people’s revolt, allowing them to brazenly expose their bandit-like actions in front of the nation.
However, from the recent “2024 Misery Ranking” of Chinese citizens listed by netizens, it is clear that the highest level of misery, including unemployment, no savings, mortgage loans, raising children, debts, debt collection pressure, illnesses, parental illnesses, and foreclosure of houses have become the reality for many Chinese people. For these individuals, any increase in daily expenses will be the final straw on their backs. Pushed to the brink, their choices may lead to extreme actions, such as harming civilians, officials, or even self-harm. However, regardless of the outcome, it will only add fuel to the fire for the Communist Party sitting precariously on the edge.