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China operates two types of price controls

Price controls in China are of two types: “prices set by the government” or “prices guided by the government,” says a WTO report.

While the former are fixed prices determined by the competent authorities, the latter are determined by the companies, but within a price range established by the corresponding pricing departments or other related government departments, within which real prices may fluctuate.

The determination of the prices set by the Government or the prices guided by the Government varies depending on the type of product or service.

In general, the market situation and average social costs are usually taken into account, as well as economic, regional and seasonal factors, and development and social needs.

Price controls

Price stability remains the main objective of monetary policy.

Inflation rates remained low during the period under review, fluctuating between -0.5% and 3.8%.

At the same time, China has a managed floating exchange rate regime.

Thus, the Chinese yuan (CNY) exchange rate is determined based on a basket of currencies whose composition is publicly known. The central parity of the CNY is set daily as a “fixed” parity.

Since 2018, officially declared foreign exchange reserves have been stable at around $ 3.1 trillion.

At the same time, no changes were made to the legislation in relation to price controls.

Article 18 of the Prices Law empowers the competent authorities to control, when necessary, the prices of: i) products that are of significant importance for the national economy and for the means of subsistence of the population; ii) a limited series of rare products; iii) products subject to natural monopolies; iv) key public utility services; and v) key public services.

Departmental regulations related to price control, 2021

In addition, laws and regulations on specific sectors of industry or services may include provisions on the administration of prices that reiterate that the corresponding companies and service providers must follow the principles and norms established in the Price Law.

These laws and regulations include the Pharmaceutical Products Administration Law, the Railways Law, the Post Office Law, the Compulsory Education Law, the Notary Services Law, the Decision of the Standing Committee of the National People’s Congress on the Administration of the Judicial Authentication, the Civil Aviation Law and the Commercial Banks Law.

 

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