China Price Reform Forum 2017 was held on December 1st at Renmin University of China. Shi Zihai, deputy secretary-general and director of the price department of the National Development and Reform Commission (NDRC), said at the forum that China's market-determined price mechanism has been basically established, and in 2016, the proportion of commodity and service prices dominated by the market reached 97.01%. In the next step, the reform will focus on six major areas, such as monopoly industries.
In November, the National Development and Reform Commission (NDRC) released the Opinions on Comprehensively Deepening the Reform of the Price Mechanism, which defines the roadmap for the reform of prices in the next three years. By 2020, the government pricing system centering on permissible costs and reasonable benefits will be basically in place, as will the system for promoting the development of green prices. In addition, the low cost price guarantee mechanism will be more sound.
achievement
97.01% of commodity prices are market-oriented
Shi said that since the 18th National Congress of the CPC, China has made breakthroughs in price reform of electricity, refined oil, natural gas, medicine, transportation and agricultural products, which has played a positive role in stimulating market vitality and improving the market system.
After five years of hard work, a market-determined price mechanism has been basically established, and a price supervision system for monopoly industries with permitted costs and reasonable returns as the core has been preliminatively established. We have leveraged prices more fully and achieved notable results in reducing costs and adjusting the economic structure.
Shi Zihai mentioned that the central and local governments have liberalized and delegated a large number of government pricing projects. At present, the scope of government pricing is mainly limited to important public utilities, public welfare services and network services, and has realized list management.
All agricultural products are now priced on the market, and refined oil products have a flexible and dynamic adjustment mechanism linked to the international market, with price adjustments issued every 10 working days. Over 80 percent of natural gas prices have been set by the market. Direct trading in electricity has reached about 23 percent. Prices of all drugs, with the exception of narcotic and psychotropic products, have been lifted. The price reform of medical services is also making positive and steady progress.
A dynamic mechanism has been put in place to adjust railway freight prices at a reasonable rate compared with highway prices. Passenger fares for high-speed trains, regular trains, soft sleeper trains and soft seats have been lifted and left to market regulation. In 2016, 97.01% of commodity and service prices were driven by the market.
Shi Zihai said that this year, provincial grid-connected transmission and distribution price rules have been issued, regional power grid pricing measures, inter-provincial pricing measures and local and incremental power grid pricing guidelines will be issued soon. Pricing reforms for long-haul, short-haul and distribution of natural gas will soon be introduced, and this year the system will cover all sectors of the pipeline sector and electricity transmission and distribution.
Mr. Shi said pricing measures for railway fares have been introduced and local utility rules are being gradually improved. Over the past 13 years, nearly 27,500 cost monitoring projects have been carried out nationwide, and 1.150 billion yuan has been deducted from the specified costs.
In addition, we have reduced costs and charges by 420 billion yuan through measures such as coal-power linkage, electricity transmission and distribution price reform, direct electricity trading, strengthening supervision over natural gas transmission and distribution, and intensifying transmission and distribution. We also implemented list-based management. A nationwide list of government-set business service fees will be published before the end of the year. The reform of the annualized target prices has achieved better results than expected and activated the industrial chain.
The problem
Six reform goals were proposed to solve six major problems
But he also said that the current price reform still faces many problems and difficulties. The main ones are: The price mechanism impeding the free flow of resource factors has not yet been completely removed, the cost of resources and environment has not yet been fully reflected in the formation of prices, the market price environment for fair competition is not yet perfect, the price and fee problems reported by enterprises need to be addressed, the long-term pricing mechanism for people's livelihood is not yet sound, and there are still some illegal pricing behaviors that harm the interests of the people. All these need to be further deepened reform to gradually resolve.
He noted that the new era has put forward new requirements for price reform, and the goal of price reform by 2020 includes six aspects: to basically improve the market-determined price mechanism; A government pricing system with permitted costs and reasonable benefits as the core has been basically established. A pricing policy system for promoting green development has been basically established; The price guarantee mechanism for low-income groups will be improved; Market price supervision and anti-monopoly law enforcement systems will be improved; A market price environment featuring free flow of factors of production, flexible price response, fair and orderly competition, and survival of the fittest has basically taken shape.
task
Price reform will be carried out in six areas including monopoly industries
In the next stage, the important task of price reform is to focus on monopoly industries, public services, green development, agricultural development, fair competition and livelihood protection, he said.
He called for further price reform in monopoly industries such as electricity, natural gas, railways and freight, and accelerated price reform of urban utilities and public services. We will establish and improve a scientific, standardized, transparent, and flexible government pricing system guided by permissible costs plus reasonable benefits for all links and basic services in which the government retains monopoly pricing. We will assess costs accurately, determine balances scientifically, and exercise strict oversight.
The price mechanism should not only fully reflect the market supply and demand relationship and the degree of resource scarcity, but also internalize the cost of environmental damage. It should be based on the basic state policy of resource intensification and environmental protection, adhere to the principle of giving priority to intensive resources, protection and natural restoration, and innovate and improve the price mechanism for ecological protection.
To ensure food security, we will actively yet prudently improve, reform and improve the pricing mechanisms for grain and other major agricultural products, improve the minimum purchase price policy for rice and wheat, and increase political flexibility and flexibility. We will deepen the reform of annualized target prices, focus on intensive water resources and focus on agricultural water, a key area that accounts for more than 60 percent of China's water consumption, and steadily advance the comprehensive reform of agricultural water prices to promote water conservation in agriculture.
He also said that through strict management of administrative institutional fees, standardize business service fees, strengthen innovation market price supervision, promote a fair review system, strengthen anti-monopoly law enforcement, actively create a fair competition market environment, promote the free flow of factors of production.
In the whole process of comprehensively deepening price reform, we must adhere to the philosophy of people-centered development, always put the people's interests first, firmly hold the bottom line, keep the prices of goods and services to a basic level of stability, improve the mechanism for price subsidies, ensure the basic livelihood of low-income groups, and constantly increase the people's sense of gain and happiness.
Price reform now stands at a new starting point. We should focus on the key tasks specified in the Opinions, seize the right opportunity, seek progress while maintaining stability and pay close attention to implementation, and unswervingly carry out price reform to the end. Shi Zihai said.