The China government has abolished tobacco leaf price controls, making it the last agricultural product to have pricing limits. China’s leading economic planner stated that the move on the part of the authorities was to lend the domestic market a much larger economic role.
However, the prices of tobacco leaf are merely a tiny force in the overall cost of cigarettes. Cigarettes form a state monopoly in the East Asian country and it is unlikely that the move to abolish tobacco leaf price controls will have a major effect on smokers in China.
China is known to be the largest cigarette market in the world and the constant efforts by the government to control smoking have so far had little or no impact.
The National Development and Reform Commission (NDRC) in China said over the weekend that tobacco was one of the 24 services and commodities whose price controls were done away with. The other products and services whose cost controls were abolished over time include parcels, railway bulk cargo, explosives for civilian use, and passenger transport.
It is over a year later that this move has been taken. More than a year ago, leaders of the Communist Party in China took an oath to lend the market a decisive role when it comes to resource allocation. This pledge was taken at an important meeting called the Third Plenum.
The economy in China has remained stagnant due to many decades of state control. However, with the many reforms that were introduced over the years, beginning from Deng Xiaoping, the economy has witnessed a remarkable turnaround.