In Reform Move, China Hikes Transport Prices

The Chinese government Saturday took its most dramatic step in more than a year toward reform of the country’s irrational pricing system, announcing sharp increases in transportation fares.

Prices of train tickets, unchanged since 1958, will jump an average of 112%, while domestic air tickets will rise 77%, State Council spokesman Yuan Mu announced in a nationally televised speech. Fares on ships and ferries are to go up 96%, he said.

Yuan, a close associate of Premier Li Peng, forcefully defended the price hikes as needed to cut government losses, fight illegal ticket scalping and cut overcrowding. The measures will promote the development of transportation infrastructure and the national economy, he said.

Announcement of the increases, which take effect Tuesday, reinforces government assertions that some economic reforms will continue even in the wake of a year-old economic retrenchment program and the ascendancy in June of hard-line leaders who called in the army to end student-led protests demanding political reform.

More sweeping price reforms, however, have a low priority in the current regime’s short-term plans.

26% Inflation in 1988

The government has continued to emphasize a fight against inflation, which ran at an official rate of 26% last year, and reassertion of control over various aspects of the economy.

It has particularly emphasized cutting non-essential construction projects, fighting tax evasion and trying to prevent companies from profiting by acquiring goods at low, state-controlled prices and reselling them at market prices.

Yuan said Saturday that there has been some initial success this year in battling inflation and that this makes the adjustment of transportation fares easier to carry out. He also said that all organizations have been forbidden to raise commodity prices on grounds of higher transportation costs.

Government leaders have repeatedly said that the retrenchment program, now scheduled to last for another three years, is intended to create conditions for carrying out additional market-oriented reforms. Many Western analysts, however, believe that some high-ranking orthodox Marxists are trying to use the retrenchment program to stop or reverse the reforms.

Premier Li is suspected by some analysts of favoring Stalinist-style central planning, which has been only partially eliminated in China. Li has repeatedly denied this, and in a speech last month, he declared that all reforms previously approved by the Communist Party and government should be continued. Li was quoted by the official New China News Agency as specifically mentioning such cutting-edge reforms as commercialization of housing and creation of enterprise share-holding systems. Experiments in these areas should continue but “under careful control and step by step,” Li said.

It is clear, however, that Li and his closest associates in the government are far less enthusiastic about rapid market-oriented reforms than former Communist Party chief Zhao Ziyang, who was removed from office in June for refusing to use force against the student demonstrators.