Several Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Price Mechanism Reform

Several Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Price Mechanism Reform

October 12, 2015

The price mechanism is the core of the market mechanism, and market-determined prices are the key to letting the market play a decisive role in resource allocation. Since the adoption of the Reform and Opening Up policy, China has, as an integral part of its economic system reform, consistently promoted and continuously deepened the price reform and liberalized the prices of most competitive goods, which has played an important role in building and perfecting the socialist market economy system and promoting the sustainable and healthy development of the economy and society. In recent years, particularly, the price reform has picked up its pace by gradually liberalizing the prices of a great number of goods and services, and the market-oriented price formation mechanism has seen marked improvements in such areas as petroleum products, natural gas, and railway transportation. In the meantime, we should also see that the price reform in some key sectors and links still needs to be deepened, the government-determined price system needs to be further improved, and the market price behaviors need to be further regulated. In order to drive the development of the price reform both in scope and depth and accelerate and improve the price mechanism in which the market plays a dominant role, the following opinions are hereby issued.

I. Overall requirements
Guiding ideology. Fully implement the spirit of the 18th National Congress of the Party, the second, third, and fourth plenary sessions of the 18th National Congress of the Party, follow the policy decisions and plans of the Party's Central Committee and the State Council, take a proactive attitude toward adapting to and leading the new norm of economic development, allow the market to play a decisive role in resource allocation and give better play to the government's role, fully deepen the price reform, improve the pricing mechanism in key sectors, perfect the government-determined mechanism, and strengthen market price supervision and anti-trust law enforcement so as to create a sound price environment for economic and social development.
Basic principles
Let the market decide. Properly handle the relationship between the government and market. The government should refrain from intervening improperly in all areas where the market can decide the price. Promote the price reform in such sectors as water, petroleum, natural gas, electricity and transportation, liberalize the prices in competitive links, and give full play to the role of the market in deciding prices.
Strike a balance between the liberalization and regulation of prices. Further improve the awareness of the rule of law, equity and responsibility, strengthen the supervision during and after the event, and optimize the price service. In areas where the government decides the price, the pricing behaviors of the government must be strictly regulated, while in areas where the business operators can decide the price at their own discretion, the market order should be maintained, fair competition be safeguarded and promoted, and the building of a modern market system be driven by improving rules and strengthening law enforcement.
Stick to the reform and innovation. Explore and innovate the pricing mechanism, regulation system, and supervision method, respect the pioneering spirit of the grass roots and the people, and drive the shift of price administration from direct pricing to the regulation of pricing behaviors, creation of a sound price environment, and the serving of transformation of macro-regulation. Give full play to the lever effect of the price, promote the economic transformation, and upgrade and improve the quality and efficiency.
Steadily and prudently push forward the price reform. The price reform should be coordinated with the reform of systems of fiscal and taxation, income distribution, trade management, and other systems. Reasonably differentiate basic needs from non-basic needs, give overall consideration to the relationships between upstream and downstream industries, between enterprise development and the ensuring of the people's livelihood, between economic efficiency and social equity, and between economic development and environmental protection, grasp the timing, pace, and intensity well, earnestly prevent various risks, and ensure stability and order.
Main goals. By 2017, the prices in competitive sectors and links will have been basically liberalized, and the scope of government-determined prices will be mainly limited to important public utilities, public services, and network-type natural monopoly links. By 2020, the market-based price mechanism will have been basically perfected, a scientific, regulated, and transparent price supervision system and anti-trust law enforcement system will have been basically established, and the price regulatory mechanism will have been basically perfected.

II. Deepen the price reform in key sectors and give full play to the role of the market in deciding prices
Allow the market to play a decisive role in resource allocation, pick up the pace of price reform, advance the streamlining of administration and delegation of powers to lower levels, strike a balance between liberalization and regulation, optimize the services, respect enterprises' discretionary pricing right and consumers' right to free choice, and promote the free flow and fair trade of goods and elements.
Improve the pricing mechanism of agricultural products. Give overall consideration to and utilize domestic and overseas markets, pay attention to the role played by the market in deciding the price, and the prices of agricultural products should be mainly decided by the market. Follow the principles of "highlighting key points and liberalizing all prices unless reserved"; based on the actual conditions of China, implement a differentiated support policy with respect to different agricultural products, adjust and improve the "amber box" support policy, gradually expand the size and scope of implementation of the "green box" support policy, protect the production enthusiasm of farmers, promote the sustainable development of agricultural production, and ensure basic self-sufficiency of grains and the absolute security of provisions. Continue to implement and improve the minimum purchase price policy for paddy and wheat, reform and improve the stockpiling policy for corn, continue to implement the pilot program of target price reform for cotton and soybean, and improve the measures for distributing subsidies. Strengthen the investigation of the costs of agricultural products and price monitoring, and accelerate the setting up of a survey and analysis system of global agricultural data to support the government in formulating relevant policies like the prices of agricultural products and agricultural subsidies.
Accelerate and advance the liberalization of energy prices.
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