China's New Price Controls: Well, So Much For Competition

Beijing slaps on price controls to stem deflation and protect jobs

Shifeng Group, a northern Chinese manufacturer of farm vehicles for the huge rural sector, had high hopes after beating out rivals and becoming the largest producer in China. Its goal was to sell 600,000 vehicles and reach $300 million in sales this year. But regulators in Beijing had other plans. They slapped state-owned Shifeng with a $110,000 fine and forced it to scale back production by 50%. The crime: The efficient producer was selling its products too cheaply--about $30 cheaper than its competitor's $700 price.

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