What is hidden behind the full liberalization of agricultural product prices?
On November 15 last year, after the State Council executive meeting proposed promoting price reform, the contents of the first batch of price reforms were announced. The state liberalized the prices of 24 goods and services, and price reform took another important step in the direction of marketization. The official of the Price Department of the National Development and Reform Commission interpreted the policy background for liberalizing prices.
Why can the prices of agricultural products be fully liberalized?
According to a notice from the National Development and Reform Commission and the State Tobacco Monopoly Administration, the purchase price of tobacco leaves will be liberalized starting from 2015. Tobacco enterprises may independently determine the tobacco leaf purchase price according to the cost and returns of tobacco growing, the demand of industrial enterprises and the needs of industry development. Previously, the tobacco leaf purchase price was set by the competent price department of the State Council together with the State Tobacco Monopoly Administration, with specific differentiated pricing by variety, grade and region.
The official of the Price Department of the National Development and Reform Commission said that liberalizing the tobacco leaf purchase price, the last variety in the agricultural product field still subject to government pricing, marks that all agricultural product prices in China are now formed by the market. Since 1978, the reform of agricultural product prices has been continuously advanced and deepened, always adhering unswervingly to a market orientation. In the process of advancing reform, adjustment and liberalization were combined, and the weight of “liberalization” was gradually increased, ultimately achieving full liberalization. Among these, in 1985 the purchase and sale prices of the vast majority of agricultural and sideline products were liberalized, in 1992 the prices of live pigs and pork were liberalized, in 1999 the cotton purchase price was liberalized, and in 2004 the grain purchase market and prices were liberalized. Liberalizing agricultural product prices promoted the great development and great emancipation of rural productive forces.
The official said that China's liberalization of agricultural product prices does not mean “simply letting go”; rather, while fully giving play to the role of the market mechanism, it combines market regulation with government regulation and continuously strengthens and improves the macro-control system for agricultural product prices. For example, the government implements a minimum purchase price policy for rice and wheat, implements a temporary purchase and storage policy for corn and rapeseed, carries out pilot reforms of target price subsidies for cotton and soybeans, establishes a regulatory contingency plan for live pigs to ease cyclical fluctuations in market prices, and, through comprehensive measures such as establishing a reserve system for important agricultural products and increasing fiscal subsidy efforts, prevents large fluctuations in the prices of major agricultural products and protects farmers' interests.
What is the purpose of the reform of domestic fares for some railway and civil aviation services?
⟦NL> Regarding the reform of some railway transport prices, the official said that for a long time, railway passenger fares and freight rates for railways invested in and built by various entities in China have basically been subject to government pricing, while passenger fares for a small number of high-grade trains and seat classes and freight rates for a small number of specific lines have been subject to government-guided pricing or market-adjusted pricing; fees for extended railway passenger and freight transport services have been subject to government pricing. In the first half of 2014, the National Development and Reform Commission successively introduced measures for the market-oriented reform of railway freight rates. This time, liberalizing 4 railway transport prices including the price of railway bulk express freight, and guiding localities to liberalize fees for extended railway transport services, is another measure to accelerate the reform of railway freight rates in the direction of marketization.It is understood that the current domestic air route cargo rates and passenger fares are managed by the Civil Aviation Administration together with the National Development and Reform Commission, mainly implementing government-guided pricing, while passenger fares for short-haul routes within provinces and for some inter-provincial routes that compete with ground transport modes are subject to market adjustment. In recent years, China's civil aviation transport industry has developed rapidly, and internal competition in the civil aviation transport market has become increasingly fierce; as the operating speed and service quality of other transport modes such as railways and highways have improved, a competitive relationship has also formed between civil aviation and other transport modes. In order to adapt to changes in the development of the transport market and accelerate the market-oriented reform of civil aviation fares, this price reform proposed three contents: first, fully liberalize domestic air route cargo rates, with airlines independently determining specific rate levels according to production and operating costs, market supply and demand, and competitive conditions; second, improve the method for setting benchmark fares, changing from government approval of route benchmark fares to government formulation of pricing rules, with airlines setting and adjusting benchmark fares themselves according to the rules, turning prior approval into in-process and ex-post supervision; third, further liberalize passenger fares for 101 short-haul routes under 600 kilometers between adjacent provinces that compete with major ground transport modes.
The official of the Price Department of the National Development and Reform Commission believes that liberalizing domestic air route cargo rates and passenger fares on some short-haul routes, and improving the method for setting benchmark fares, are specific measures to streamline administration and delegate power, reduce government intervention, and advance price reform. They are conducive to guiding the rational allocation of resources in air transport, stimulating market vitality, and mobilizing the enthusiasm of social capital for investment; they are also conducive to promoting airlines to continuously improve their operation and management level, enhance competitiveness, cultivate new growth points in transport, and better meet social demand.