China to accelerate price reform this year

Measures on sectors like electricity, drugs to be released soon

China will accelerate price reform this year in sectors such as electric power, head of the country's top price regulator said Thursday.

The National Development and Reform Commission (NDRC) will further strengthen its efforts on price reform this year and reform measures in sectors including electric power and drugs will be released soon, Xu Shaoshi, minister of the NDRC, told a press conference during the ongoing annual two sessions in Beijing.

Xu's words came after Premier Li Keqiang said while giving a government work report Thursday that China will take action to accelerate the price reform by removing price controls on most drugs and improving the price formation mechanism on resource products.[Special coverage]

Previously, the NDRC announced in January to remove price controls on 24 commodities and services including railway bulk cargo transport, passenger transport for some airlines as well as port service fees.

"It is a very good time to promote the price reform as inflation in China remains at a low level," Liu Xuezhi, an analyst at Bank of Communications in Shanghai, told the Global Times on Thursday.

According to data released by the National Bureau of Statistics, China's consumer inflation in January rose 0.8 percent from a year earlier, the slowest pace in more than five years.

On Thursday, Premier Li set the inflation target for 2015 at around 3 percent, higher than previous market expectations.

"Setting a relatively high inflation target may signify the central government would like to reserve leeway for pushing forward price reform this year in sectors such as energy and resources," Liu said.

The NDRC said on January 15 that it has approved a pilot reform to launch a new electricity distribution pricing system in Shenzhen, South China's Guangdong Province, to promote the marketization of electric power prices.

"The pilot reform may be expanded to more areas in the country this year and resource price reforms for natural gas and gasoline are also expected to be accelerated in 2015," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Thursday.

"The energy demand in ­China is expected to remain at a relatively low level amid a slowing economy and removing price controls is unlikely to cause a rapid increase in energy prices, so it is an appropriate time to accelerate price reform in the ­energy sector this year," Lin said.

Addressing China's overcapacity problem, Xu from the NDRC noted that Chinese authorities will further promote projects that export the country's industrial capacity and equipment under a "win-win" principle.

"China has lots of industrial capacity with comparative advantages, but it is not fully utilized," Xu said.

"Meanwhile, there is huge demand in some overseas countries," he noted.