During its transition from a planned to a market-oriented economy, China displayed a lack of independent pricing capability over both domestic and exported commodities, particularly in the financial market, said central bank governor Zhou Xiaochuan at the opening ceremony of Beijing Financial Culture Festival, September 1.

Medium-and-small-sized enterprises run into difficulty in getting loans, said Zhou, and this is to a great extent due to a lack of full use of independent pricing right. The problem also stands behind the ongoing split share reform. The Renminbi exchange rate reform also gives rise to a pricing question, that is, the problem of pricing and transaction in forward foreign exchange, which is related to risk considerations.

Several reasons are behind the weak pricing capability, Zhou pointed out. First, prices were always officially set in the past instead of by financial institutions; second, no professionals are trained in this regard; third, the state has been responsible for gains and losses, giving financial institutions no incentive to do independent pricing.

By People's Daily Online