Chinese government lifts price controls on 24 commodities and services, including air and rail cargo

Out-Law News | 05 Jan 2015 | 5:26 pm | 1 min. read

Government-set controls on the cost of air and rail passenger and cargo transportation in China will be lifted as part of a drive to deregulate prices and improve competition, the country's National Development and Reform Commission (NDRC) has announced.

The changes are amongst eight sets of regulations lifting price controls on 24 different commodities and services published on the NDRC's website this week. The documents cover tobacco pricing, rail transport, civil aviation, ports, professional services, local services and explosive materials for civil use; and the changes took effect in November and December 2014.

Sun Zhang, a professor at Tongji University, told state-owned news agency Xinhua that government controls on railway passenger and cargo prices had impeded the development of China's railways, as any changes "lagged far behind" those in road and water transportation costs. Xinhua said that the changes followed a pilot exercise during which prices were freed up on the Zhunchi Railway, a short private railway in north China.

The NDRC said that it would continue to monitor the market prices of the relevant goods and services, and would take "early" regulatory action to prevent any price volatility or anti-competitive behaviour that emerged as a result of the changes.

The cost of transporting rail cargo, Express Railway parcel shipping and passenger fares was deregulated on 23 December, according to a statement on the NDRC's website. The changes are intended to promote railway investment and financing as part of a competitive, integrated transport system and to encourage private sector capital investment in the railways, it said.

Reforms to domestic civil aviation passenger and freight prices took effect on 25 November, the NDRC said. The changes include the "full liberalisation" of cargo transportation prices on domestic routes and giving operators more power to compete on short-haul passenger fares in order to "reflect market supply and demand and competition" while meeting the needs of different types of customer. The Chinese government will retain some control over domestic air passenger fares, according to the announcement.

On 16 December, changes to price controls on open container loading, international passenger terminal operations, ship waste disposal and water supply came into force. The Chinese Ministry of Transport and NDRC will jointly develop further port charging rules in order to "maintain good market order", according to the announcement. Price controls have also been lifted on the cost of trademark certification registration, some legal services, real estate services and accountancy, it said.

The market will also be allowed to decide the price of tobacco and tobacco products, ending all state control of the pricing of agricultural products, the NDRC said. Various tobacco management departments will continue to supervise the sector to ensure orderly trading and protect the interests of tobacco farmers, it said.