After earlier reports of a sales ban at the summer solstice event in the southern city of Yulin, animal rights groups said vendors and officials reached a compromise and set a limit of two dogs on display per stall.
But multiple carcasses rested on several stalls at two markets, with stiff pointy tails, leathery yellow skin, eyes shut and bared teeth as if in a final growl.
Crowds of umbrella-toting festival goers braved the rain to stand in line outside popular restaurants, but animal welfare groups said sales appeared to be down this year.
Behind two long rows of dog butchers at the Nanqiao market, others sold cow tongues and pork hocks. But even they sold some dog parts, including liver.
Others offered poultry, vegetables and fruit, including big bundles of lychees, which are eaten alongside dog dishes.
There was a heavy police presence outside the market and at all intersections but officers did not seem to be checking stalls.
A man yelled at an AFP reporter at the Dongkou market, warning against taking photos and demanding that they be deleted.
Residents said dog meat was just part of their tradition.
Wu San, 40, used a blowtorch to burn the hair off a dead dog on the floor of a house.
It was given by a friend who had used it as a guard dog but no longer wanted it because "it would only wag its tail, it wouldn't bark anymore," Wu said.
"We'll eat it tonight with friends," Wu said. "Small dogs don't taste good. Dogs that are too fat don't taste good either."
Thousands of dogs have traditionally been killed during the festival in conditions activists describe as brutal, with dogs beaten and boiled alive in the belief that the more terrified they are, the tastier the meat.
The tradition dates back centuries to the Ming Dynasty, with people eating dog and lychees in the belief that it gives them strength, according to Xinhua news agency.
Between 10 million and 20 million dogs are killed for food annually in China, where consumption is legal, according to the Humane Society International (HSI).
But animal rights groups have sought to stop the sale at the annual festival.
"Despite the fact that there does not seem to be a ban on all dog meat, the festival appears to be smaller this year, with fewer dogs losing their lives to this cruel industry," Irene Feng of Animals Asia told AFP.
Activists reported a "significant decrease" in sales at markets, with some traders saying they had stopped buying dogs, according to HSI.
"Ending the Yulin dog meat festival will be made up of smaller victories such as this and it's important that we recognise when progress has been made," said HSI spokesperson Wendy Higgins.
But locals disagreed that sales were down.
Outside the markets, vendors sold stewed dog meat out of enormous steaming woks, shovelling big portions into plastic bags for passing customers.
Some changed their "dog meat" signs to read "tasty meat" instead. One restaurant covered the character for dog on its sign.
A restaurant owner surnamed Yang said he expected to sell six dogs a day during the festival.
"Business during the festival goes up about ninefold. But don't worry, we always manage to have enough dogs," he said.
Liu Zhong, the owner of a small herbal medicine shop, said police were checking whether restrictions were being observed but wholesalers operate out of homes or secret locations.
"They just won't sell to people they don't know well. It's just a bit more under wraps," said Liu, who stopped eating dog meat 10 years ago and now owns seven of them as pets.
Li Yongwei, a Yulin resident in his 40s, said dog was the same as any other meat.
"You shouldn't force people to make choices they don't want to make, the way you wouldn't force someone to be a Christian or a Buddhist or a Muslim," he said.
Chen Bing, a 25-year-old office worker playing mahjong with friends, said the government could not cancel the festival even if it wanted to.
"The festival will go on. Young people, old people, even babies are all eating dog meat. It's tradition."