OREANDA-NEWS. December 10, 2014. China has commenced the introduction of a series of reforms in pricing. It first plans to lift price controls imposed on energy and medicine while trying to avoid substantial impact on the daily lives of the public, reports the Chinese-language Economic Observer.

Price reforms were the main topic for discussion even during the State Council's regular meeting on Nov. 15, and were described as a key step in the country's plan to introduce market liberalization and transform the government's role, the report said.

Following the meeting, government sources said planned price reforms have been initiated after the streamlining of government powers and reforms in the fiscal and tax system were launched.

Several trial schemes for relaxing government price controls have been introduced in different regions and provinces in China, including replacing the minimum government purchase price for cotton and soybeans with a target price being set in Xinjiang, Inner Mongolia and the country's northeastern provinces in June, said the report.

On April 1, the National Development and Reform Commission (NDRC) announced the removal of government set cargo rates on the rail link between Shenmu in Shaanxi province and Baotao in Inner Mongolia, which will be replaced with a reference price, while a cap will also be introduced.

The commission also said the operator will be allowed to set cargo rates on the Huaichi rail link after it begins operations.

Moreover, Shanghai has decided to lift price controls imposed on medicines outside the government procurement list. In China, drug prices are capped by the maximum retail prices set by the government, said the report.

Reforms will be introduced in the water supply, oil, natural gas, electricity, transportation and telecommunications sectors, and the government will also establish a mechanism to deal with abnormal price fluctuations and enhance monitoring in the market, the newspaper said.

The declining energy prices since 2013 have offered China a good opportunity to liberalize pricing, since such measures usually lead to prices hikes, an NDRC official said.

The official also said that price reforms during the initial stage before June 2015 will not touch on public services and areas that will directly affect people's daily lives.

According to Shi Dan, deputy head of the Chinese Academy of Social Sciences' Institute of Industrial Economics, the government is trying to transform industries through planned price reforms.