Guangdong planners say energy prices could increase by nearly 40 per cent this year, costing the province an additional 77.6 billion yuan.
A study by the Guangdong Prices Association - a think-tank set up by the provincial price bureau - said coal prices could rise by 38 per cent, while gas prices could rise 37 per cent, oil prices 19 per cent and electricity prices 15 per cent, state media reported yesterday.
The association proposed freeing up the oil market and reforming the pricing mechanism for water and electricity to encourage competition.
Guangzhou's Lingnan University economist Lin Jiang said that for its longer-term competitiveness, Guangdong had no choice but to free up its market.
'We are now in a situation where we cannot avoid liberalisation and we cannot open up all at once ... It's very problematic. The government has to find a balance between liberalisation and a closed market,' he said.
Professor Lin said the Guangdong government was not concerned and was paying more attention to conserving energy as a way to reduce costs, but that amounted to 'avoiding the problem'.