The China Post Group Corp was formally launched yesterday, marking another step in China's postal reform.

The splitting of the corporation from the former postal system, which combined both government and business functions, will provide a reference for China's reform in other sectors that have yet to clarify the relations between government departments and their business functions, such as the railway.

For more than two decades, the government has been pushing the idea of separating the business functions from government sections. This is an integral part of the market-oriented reform shaking off the fetters of the planned economy mentality.

The progress in separating these functions will shape the future of our market-driven economy, one that has proven to be more dynamic than an economy under government control.

With the government function split off to serve as an independent and unbiased overseer of an orderly market, private businesses will be given a level playing field. It is the fundamental principle of a market-based economy.

China's reform history shows, however, that while such reforms start off well, they need meaningful follow-up measures to meet their reform goals.

As in the telecom industry, which undertook a similar reform track years ago, a common concern is whether the newly detached regulators will take an unbiased stance. It is possible that the regulation officials and managers of the new State business may be former colleagues and maintain various links.

Considering China's legislative process, in which departmental interests are influential and often decisive, such concerns are not groundless.

The recent growing number of complaints by private express delivery companies about the revised Postal Law, which they say has left too little room for them to expand, shows that policymakers may have failed to fully allow for the potential of private business.

The State postal sector has suffered some losses as it has shouldered the national task of providing unprofitable common mail services in distant regions.

Policymakers could consider giving the new State company a lump-sum subsidy but should not continue to place it above private competition in the market.

                                                                     (China Daily 01/30/2007 page10) 

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