Regulations of the People's Republic of China On Price Control

Regulations of the People's Republic of China On Price Control REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA ON PRICE CONTROL (Promulgated by the State Council of China on September 11, 1987) CHAPTER I GENERAL PRINCIPLES Article 1 These Regulations are formulated to implement State price guidelines and policies, tighten price control, maintain the basic stability of market prices, ensure the smooth implementation of economic reform and improve the development of a socialist planned commodity economy. Article 2 As long as State interests are protected, price control efforts shall safeguard the legitimate economic interests of producers, sellers and consumers and enable the correct handling of economic interests among the central government, local governments, departments and enterprises. Article 3 The State shall adopt the principle of combining direct price administration and indirect price control, whereby three types of prices, namely a State stipulated price, a State guided price and a market adjusted price, are implemented. Article 4 The State shall implement a system of uniform leadership and graded control with regard to price control matters. Commodity price control organizations, (hereinafter referred to as commodity price departments) of people's governments at the various levels, the competent departments of people's governments at the various levels, as well as price control organizations and employees of enterprises and public institutions shall strictly abide by State laws, regulations and policies on prices and shall effectively conduct price control and supervision. CHAPTER II PRICE DETERMINATION AND PRICE CONTROL Article 5 Prices referred to in these Regulations include: (i) various commodity prices; (ii) rates of fees for various service items (hereinafter referred to as service fee rates). Article 6 The price of a commodity shall be made up of the average production cost of the commodity, as well as tax, profits, and normal circulation costs. Article 7 The determination and adjustment of the price of a commodity which is subject to State stipulated prices or State guided prices shall be approximately the same as the value of the commodity, and shall reflect supply and demand conditions, meet State policy requirements and comply with the following principles: (i) maintain a reasonable relative price relationship between the various commodity prices; (ii) provide explicit quality levels or grade criteria and implement quality pricing; (iii) implement reasonable purchase and sale price differentials, wholesale and retail price differentials, regional price differentials and seasonal price differentials, on the precondition of a reduction of the number of marketing stages through which goods must pass and a reduction of costs incurred in this circulation of goods. Article 8 State stipulated prices refer to commodity prices and service fee rates determined by the commodity price departments and the competent departments of the various people's governments at county level and above in accordance with their area of jurisdiction as stipulated by the State. State guided prices refer to commodity prices and service fee rates determined by enterprises within the guidelines prescribed by the commodity price departments and the competent departments of the various people's governments at county level and above in accordance with their area of jurisdiction as stipulated by the State, through the setting of a fundamental price fluctuation range, a rate differential, a profit rate, a ceiling price and a minimum reserve price. Market adjusted prices refer to commodity prices and service fee rates determined by producers and sellers. Article 9 A list of commodities and service fee items which are subject to division of control and under State stipulated pricing and State guided pricing shall be formulated and adjusted by the State commodity price department and provincial, autonomous region and directly administered municipal commodity price departments designated by the State commodity price department. Article 10 Assessment and adjustment of commodity prices and service fee rates shall be conducted in accordance with their area of jurisdiction and the procedures as stipulated by the State. No regional department, unit or individual shall exceed its jurisdiction by determining or adjusting commodity prices or service fee rates without authorization. Article 11 The relevant State Council departments in charge and the various local people's governments shall keep informed on market commodity prices and shall, through organizing supplies from State-run industrial and commercial enterprises, commodity supply enterprises and supply and marketing co-operatives, participate in market adjustment and the control of market commodity prices. When market-adjusted commodity prices undergo sharp rises or falls, the commodity price departments may set a maximum and minimum reserve price for fixed commodities for a certain period of time and may implement a price rise application system. Article 12 The commodity price departments shall strengthen control and supervision of prices of urban and rural markets and individual household industrial and commercial operations. CHAPTER III PRICE CONTROL DUTIES Article 13 The State commodity price department shall perform the following duties in areas of price control: (i) research and draft State price guidelines, policies, plans and reform programmes and organize the implementation of such items following their approval by the State Council; (ii) research and draft laws and regulations on prices; (iii) take responsibility for the control and overall balancing of prices throughout the country; (iv) outline guidelines and methods for commodity and service fee pricing, determine and adjust commodity prices and service fee rates which are subject to a division of control and, in the case of determining or adjusting key commodity prices or service fee rates, discuss details with relevant State Council departments in charge and subsequently submit the proposal to the State Council for approval; (v) guide and supervise the relevant State Council departments and provincial, autonomous region and directly administered municipal people's governments in respect of price matters and investigate and deal with acts violating price laws, regulations and policies (hereinafter referred to as illegal pricing acts); (vi) mediate and settle price disputes between the relevant State Council departments, betwe......