March 4, 2006
Noodle Prices Rise, Along With Chinese Tempers
By JIM YARDLEY
The New York Times

LANZHOU, China — One difference between China's remote west and the rest of the country is what people choose to put in their stomachs. Noodles, not rice, are the favorite dish, none more so than the steaming bowl of beef noodles named after this decaying provincial capital on the Yellow River.

So in February, as noodle patrons across the city arrived for their morning fix, an unexpected notice awaited them: The price of a bowl of Lanzhou pulled beef noodles was going up. A large bowl, once only 27 cents, would now cost almost 31 cents.

"Beef Noodle Price Hike Touches Off Nerves Everywhere!" declared The Western Economic Daily, a feisty local paper.

And so it did. A full-blown noodle controversy arose, with price fixing by a noodle cartel being alleged. Polls gauged public opinion (Answer: not pleased). Even People's Daily, chief mouthpiece of the Communist Party, registered its indignation. Local officials promised to investigate.

But on the streets of the city's Anning District, where more than 70 noodle shops are crowded into several square blocks, the noodle contretemps was also a reminder of the millions of Chinese who still live on margins so slender that a bump of 4 cents for a bowl of noodles constitutes real money.

"There is nothing I can do about it," said Yu Songling, 50, a manager at an outdoor market in Anning. The neighborhood, in the midst of being rebuilt, is like a carcass left over from the old socialist economy: decrepit state-owned factories, many of them now closed, and vast numbers of laid-off workers, many scraping by on minimal welfare benefits.

"There are a lot of wolves," said Mr. Yu of the struggle faced by many people in the neighborhood, "and not enough meat."

There have always been enough noodles, though. Noodles served in a scorching, spicy broth in the winter or al dente in the summer, tasty, warm, filling and cheap. Lanzhou beef noodles call for chives, red peppers, beef bouillon and noodles, a recipe that to the unschooled seems mundane but one that many locals consider a subtle art.

"There is a big difference between noodle shops," said Wang Xiaoxia, 29, a taxi driver. "The taste, the color, the aroma. On days I drive, I always eat noodles. It makes me feel good."

For people in Anning, the Black Sunday of the noodle controversy was Feb. 12. Posters suddenly appeared in noodle shops announcing a price increase of 3 mao, or about 4 cents. Higher costs, wage increases, taxes — even China's embrace of market economics — were blamed. A day later, the price rose.

Inside one of the biggest shops in the neighborhood, the Gazhang Halal Beef Noodle Shop, the poster with the price increase hung beside a small table where the manager sold boiled eggs and tickets for noodles. In the small kitchen, a cook in a blue smock pulled noodles into long strands, twisting them in his hands like yarn before tossing them into a cauldron of boiling water that filled the room with steam.

Kitchens like this one can be a first step out of rural poverty for some migrant workers. At the Gazhang shop, all the workers are from the owner's home village, a typical arrangement. An owner gets cheap, reliable help; a migrant worker gets a trade and a start. But where last year a trained cook made $60 a month, the rate is $90 or higher this year because of increased competition for low-wage workers. At the same time, the price of flour also has risen.

"All the expenses are going up," said Zhang Yuxiao, 31, the owner of the Gazhang shop. "We're just following the market."

But was it really just the market? The number of noodle shops in the city has risen, increasing supply. In early February, price increases in other districts of the city had already attracted attention.

Then a day after the increase in Anning, The Western Economic Daily broke a major scandal: "The Beef Noodle Price Hike, a Price-Fixing Scheme." The paper documented a coordinated pricing scheme, led by a small group of noodle shop owners, who had made threats against any owners who resisted.

One owner, Ma Ali, taking a break from his kitchen after the scandal had become public, confirmed the pressure tactics. "They came over and handed this to me," said Mr. Ma, showing a two-page agreement that called for every shop owner to raise prices. "They said, 'If you don't raise your prices, we're going to tear down your shop sign.' "

But, Mr. Ma added, noodle shops face a problem of too much supply and too little labor: "Of course, what they are saying is true. We are not making a lot of money. And it is hard work."

It also made a good story. The Western Economic Daily, a private newspaper, wrote editorials, commissioned a poll and continued a barrage of headlines like "Ruthless Competition Leads to a Vicious Cycle" and "Beef Noodles: Price Collusion Is Illegal." Finally, the city price bureau opened an investigation.

None of the ringleaders are confessing to any wrongdoing. (Mr. Zhang, owner of the Gazhang shop, is one of the owners listed as an author of the two-page agreement calling for the higher prices. Asked about price fixing and the newspaper stories, he replied, "Journalists have nothing else to do.")

So far, nearly all of the noodle shops in much of the city are still charging the higher price. An exception is Master Zhang's Beef Noodle, a dingy storefront in the Anning District that opened in late December. The owner, Zhang Wei, 41, has struggled to make a living since losing a factory job more than a decade ago. He thought noodles might work.

He, too, got a visit from the noodle cartel, and his wife even signed an oath with a thumbprint, pledging to raise prices. But after Mr. Zhang saw the newspaper coverage, he returned his prices to the lower rate. "I had a lot fewer customers after I raised the prices," he said.

And he has other worries. A new shop just opened around the corner. "And they are giving away eggs," he said. "People here are really poor. They don't make any money, so they go there because they give away the free egg. If I start giving away eggs, I start losing money."

So, like owners of every other Lanzhou noodle shop, Mr. Zhang hopes to succeed by giving Lanzhou residents what they most seem to want — good noodles.

"It's all going to depend on the taste of the noodles," he said. "If people like the taste, they will slowly start coming."