Li Kun, an associate researcher from the Institute of Comprehensive Transportation of the NDRC, believes the move is designed to stimulate social investment in the railway sector and propel infrastructure development. In fact, the State Council has been committed to reforming railway financing and investment systems and encouraging social capital to flow into railway construction.

Moreover, the NDRC and Civil Aviation Administration of China announced that they would completely liberalize the cargo transportation prices of domestic flights, free up the passenger transportation prices of 101 short-haul airlines connecting adjacent provinces and competing with ground transportation, and transfer the power of establishing and adjusting benchmark prices to air transportation enterprises for domestic airlines, which retain government guidance prices.

Wang Tongshui, President of Civil Aviation University of China (CAUC), said these measures target at reduction of government intervention, which will improve the efficiency of resource allocation, revitalize the market and arouse the investment enthusiasm of social capital. Beyond that, airline companies will be motivated to upgrade management, strengthen competitiveness and foster new growth points.

Li Xiaojin, a professor from the Economics and Management College of the CAUC, said the elimination of price regulation will give airline companies more freedom to align price with demand in order to elevate seat occupancy rates and offer consumers more choices.

"What people care about most is whether the elimination of price regulation will lead to a price hike. The answer is no," said Cheng Xingyun, a transportation and communication official from the NDRC's price department.

"Take the 101 short-haul airlines connecting adjacent provinces for example. Since almost all of them are no longer than 600 km, the prices of their air tickets are not likely to surge," said Cheng.

Email us at: dengyaqing@bjreview.com

Categories Undergoing the Price Reform

- Procurement Prices of Tobacco

The NDRC and State Tobacco Monopoly Administration will liberalize the procurement prices of flue-cured tobacco, burley tobacco, aromatic tobacco, etc.

- Railway Transportation Prices

The NDRC will free up the pricing for railway bulk, parcel transportation, cargo and passenger transportation. Price easing for cargo and passenger transportation is specifically made possible through newly built railways invested or controlled by social capital.

- Prices of Domestic Civil Aviation Cargo Transportation and Part of Civil Aviation Passenger Transportation

The NDRC and Civil Aviation Administration of China will completely liberalize the cargo transportation prices of domestic flights, free up the passenger transportation prices of 101 short-haul airlines connecting adjacent provinces and competing with ground transportation, and transfer the power of establishing and adjusting benchmark prices to air transportation enterprises for domestic airlines which retain government guidance prices.

- Prices of Port Services

The NDRC and the Ministry of Transport will liberalize the pricing of labor such as container loading and unloading and the pricing of services such as garbage disposal at port.

- Ex-Factory Prices of Civilian Blasting Material

The NDRC, Ministry of Industry and Information Technology and Ministry of Public Security will liberalize the ex-factory prices of civilian blasting material and eliminate the management of its circulation tariff.

- Prices of Seven Professional Services

The NDRC will free up the prices of seven professional services, including applying for visas certified by foreign consulates, providing encryption key to certificates, developing customs statistical material and data, certification services like trademark registration, mediating economic and trade disputes involving foreigners or Taiwanese, land price evaluation and real estate price evaluation.

- Prices of Nine Commodities and Services

The NDRC requires local authorities to liberalize the pricing of extended service of railway cargo and passenger transportation, extended postal service, accountant service, tax accountant service, assets evaluation, real estate brokering, property service of non-affordable apartments, packing service at residential communities and part of lawyer service.

(Source: National Development and Reform Commission)