By Wang Qing, Institute of Market Economy, the DRC

Research Report No 161, 2013

Abstract:

China's liquor industry and liquor market have experienced a "golden decade" of development since 2003, playing a positive role in propping up the local economy and tax revenue growth.

Starting from the fourth quarter of 2012, the liquor market began to undergo dramatic changes. The industry is characterized by overcapacity and oversupply in terms of output. Production and consumption of high-end products has already become a serious problem concerning industrial structure. Structural adjustment is urgently needed.

Spending cuts by the Party Central Committee, military and local governments, along with the economic slowdown and the Chinese liquor plasticizer incident, have forced the industry to make structural adjustments. But in fact, the need for reform comes from fundamental problems and conflicts accumulated in the past decade in the consumption, production and marketing of the industry.

Under such a situation, it is imperative that the liquor industry should carry out structural adjustments to seek balance in the market and new development.