China's top economic planner, the National Development and Reform Commission (NDRC), said that the price controls on tobacco leaf have been abolished.
The move which comes more than a year after Communist Party leaders pledged to give the market a decisive role in resource allocation at a key meeting known as the Third Plenum, is expected to give the market a greater economic role. However, tobacco leaf prices are only a small factor in the cost of cigarettes so the move is unlikely to have a significant effect on smokers. The NDRC official Wang Shengmin said, "Leaf tobacco only accounts for a very small portion of China's agricultural market, and the relaxation won't cause much fluctuation of cigarette prices, as the cost of tobacco leaves usually accounts for about 5 to 10 percent of the final product. The tobacco price will be determined according to industrial supply and demand and company costs and profits."
With approximately 2.5 million tonnes of tobacco production a year, China is the world's biggest market for cigarette. Tobacco kills more than one million people in China every year, where some brands can be purchased for as little as 3 yuan ($0.49). Experts say the number of smoking deaths could triple by 2030. Yet the government efforts to curb smoking have had limited impact. Experts point to the state-owned China Tobacco Company that retains its monopoly on cigarette production, which accounts for nearly a tenth of national government revenue, as one of the biggest obstacles to anti-smoking efforts.
Beijing city authorities have passed an anti-smoking legislation which will be in effect from June as the government seeks to curb the habit among the country's 300 million smokers.
Besides tobacco, the NDRC removed the cost controls on 23 other commodities and services which included railway bulk cargo, parcels, passenger transport and explosives for civilian use.