What did modern China do with food sold to the state?
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The Chinese government, from 1978/9 onward, bought food from rural farmers to supply urban consumers at a subsidised price. This was done as part of their overall policy to ensure/promote industrialisation, beginning with Deng Xiaoping.
From Unravelling China's Food Security Puzzle, 1979–2008 (2018) (pdf). p.805:
To support China’s industrialization, the urban food supply was protected and urban food prices were heavily subsidized by the reforming government. The government was the main trader between food producers and food consumers. It performed the role of food monopsonist in the farming sector and monopolist in the urban industrial sector, and largely controlled the food supply from the agricultural to the industrial regions.... The government had to meet the demands of the urban food consumers by procuring food from the rural producers and then selling it on.
p. 808:
The research shows that the Chinese government’s notion of food security includes the aims of not only maximizing grain output (food availability) but also ensuring a subsidized low-priced urban grain supply (food accessibility), implying a rural-to-urban welfare transfer via the state food monopoly mechanism.
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Source: stackoverflow.com
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