By Feng Fei, Shi Yaodong, Wang Xiaoming, Wang Jinzhao and Song Zifeng, Research Department of Industrial Economy; and Deng Yusong, Institute of Market Economy

Research Report No 122, 2013

Abstract:

The problems in China's pricing reform have not been fundamentally relieved over the past several years, leading to improper resource distribution, an imbalanced structure and extensive development of the economy.

To solve pricing problems, China needs to stick to the reform principle of "one direction, two mechanisms." "One direction" means sticking to market-oriented reform, allowing market supply and demand to serve as the basic and leading force to determine prices.

"Two mechanisms" refer to the price-setting mechanism and price-supervision mechanism. The former aims to turn price into a signal reflecting the scarcity of resources, the real supply and demand in the market, and the cost of environmental destruction. The latter calls for effectively regulating and fighting against such behaviors as price manipulation and price fraud.