By Gu Shuzhong & Li Weiming, Research Institute of Resources and Environment Policies of DRC

Resource prices in China currently face many problems which boil down to pricing mechanism embodied in the following three aspects. 1. Government pricing is still prevalent; as a result, resource prices cannot reflect the real value and real cost of resources. 2. The full cost accounting of resources has not yet been well practiced. 3. The transmission mechanism of resource prices is inappropriate. However, at present and over the next period, reform of resource prices is and will be facing a lot of pressures and challenges, including especially the following three aspects: 1. Dual pressures posed by reform of resource prices and control over price rises; 2. Conflicts between cost accounting of resource prices and monopolistic operation of resources; 3. Conflicts between implementing reform of the market-oriented allocation of resources and ensuring the basic needs of the people on low incomes. Therefore, reform of resource prices at present and over the next period must adhere to the following five cardinal principles in order to make genuine progress in a scientific and orderly manager: 1. The principle of market orientation with government regulation; 2. The people-centered principle with the promotion of harmony; 3. The principle of making overall consideration in planning and advancing with supporting measures; 4. The principle of overall planning and proceeding step by step; 5. The principle of seizing opportunities and making the best use of the situation. At present, reform of resource prices should focus on the following six aspects: 1. To improve resource pricing mechanism; 2. To define the cost of resources reasonably; 3. To straighten out resource price parity; 4. To standardize the procedures of government pricing; 5. To let the market decide resource prices; and 6. To improve government regulation over resource prices.