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Chris Yeung

CHINA is seeking a breakthrough in politically-sensitive price reforms in three to five years, according to the official New China News Agency (NCNA).

  The NCNA said economists generally believed that reform of the prices of general commodities had gone smoothly.

   ''Now it is the time to tackle the most difficult part of price reform,'' it said.

  The ''dual pricing system'' - fixed government prices and market prices - must be scrapped in the process of developing a market economy.

  ''It is a very difficult task, but it cannot simply be shunned,'' the report said.

   The Government had been lifting controls on prices since reform and the open door began in 1979.

    Prices of more than 80 per cent of industrial and agricultural products were determined by the market by the end of last year, the report said.

  A price system comprised mainly of market prices but with government-fixed and government-regulated prices had evolved, it said.

  The problem of the unreasonably low price of grain and basic industrial products had been improved, the report said.

  There were still 15 commodities - mainly raw materials directly related to the people's livelihood - whose prices were still decided by the Government.

  The question of how to determine the price levels of new commodities including labour, capital and skill had emerged, the report said.

  Experts said reforms had to be intensified to deal with the sensitive task of price deregulation.

  They suggested that the number and quantity of commodities under government control should be gradually reduced after taking into account how acceptable this would be to the state, individuals and enterprises.

  The development of a market system should be speeded up to help set up a price system under which market forces would be dominant and, at the same time, the Government should retain macro control over prices.

  It said all provinces and cities would take measures this year to streamline the price of iron and steel, coal and transport.

  Reforms over the wage and taxation system will also be quickened this year, it said.

  In another NCNA report, officials conceded that the drafting of laws on the market economy was far behind its development, and there was still a long way to go.



Breakthrough on price reforms sought