"The catalogue legally supports the market to better allocate resources and improve Shanghai's investment environment," said Shen Niandong, chief economist of Shanghai Municipal Price Bureau.

The moves by these two cities are meant to fulfill the pricing law of the country and meet requirements by the World Trade Organization toward more transparent and normalized economic polices.

The governmental pricing system which dominated the planned economy that China used to adopt has been slashed. More market factors will be utilized under the new catalogues.

Compared with the Shanghai Price Management Catalogue issued in 1997, the new catalogue has no provisions on 48 different kinds of products on everything from corporations to drinks, newspapers and film tickets.

Prices of 96.1 percent of the city's retail volume for social consuming goods will be set by the market, as will 97.1 percent of the purchase volume of agricultural goods and by-products and 96.1 percent of the sales volume of production materials.

"It is a milestone step forward since 1992 when prices began to be less controlled," said Jiang Yaozhong, deputy director of the Shanghai Development Planning Commission and director of the local price bureau.

The new catalogue will go into effect on December 1. Beijing's catalogue will take effect on November 1.

In Beijing's catalogue, 94.6 percent of the commodities and services such as landway freights, medical services and tea will be priced by the market and only 5.4 percent will follow the government instructed price or the guiding price of the government.

The catalogue also lists seven kinds of commodities and services that are priced by the government such as fees of compulsory schooling, household water, gas, heating, rail passenger transportation, buses and taxis.

(China Daily October 23, 2002)