By Qi Yunlan　

Date: 2004/08/18

Abstract:     

In the first half of 2004, the general price level of the service industry has grown by only a small margin. But there are significant differences across the sub-sectors in this industry, in which rural areas see more price hikes than the urban areas. The main reasons are considered to be cost-driven, which include higher personal income, demand-driven consumption structure lifting, and price increase in the energy product. The price variation in the service industry is considered a normal phenomena, the government should not intervene with a high hand; however the prices of public services under the management of government should be regulated with due attention and good pace. The government should focus on rural service prices to prevent an unreasonable price hiking, which is vital in securing the farmers' welfare through the increasing of their income. In a middle- and long-term perspective, what is needed is to reform the services under monopoly, relax market-entry restrictions, and introduce competition to assure a healthy development of the service industry.