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China freezes price hikes of admission tickets to tourist spots
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20:19, April 29, 2008

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The Chinese government has staged a national overhaul to axe overcharging in the admission tickets for tourist sites, banning further price rises in the coming 12 months and vowing to open most public museums, memorials and patriotic educational sites for free in two years.

The campaign began on April 9 and was made public Tuesday by the National Development and Reform Commission (NDRC), the top economic planner in charge of pricing, ahead of the international Labor Day holiday on May 1.

It will last through a summer tourism boom which industry analysts foresaw from an influx of tourists around the August Beijing Olympics and the growing habits of having annual vacations on home turf.

During the year-long overhaul, tourist sites are prohibited from charging more for either entrance or for transport such as cable cars, sight-seeing vehicles or yachts, said a NDRC statement with endorsement from seven other ministerial departments.

Tourism expert Wu Jiaoli with China's top online travel operator Ctrip recognized the move as "positive in reducing consumers' trip costs". But the statement's vague wording on what should be categorized as "overcharge" and how to measure the pricecuts have made her reluctant to gauge the move's efficacy on boosting the tourism industry.

As China embraces a market economy and relies on market forces for pricing, tourist sites, especially cultural relics and scenic spots, are among the few exceptions that will still have their prices set by governmental departments.

Only a small fraction of artificially-developed cultural landscapes are allowed to be priced by investors or operators.

Chinese regulations have commissioned provincial economic planners to price for tourist sites but laid out only rough principles on the pricing criteria.

Significant cultural relics, large museums and renowned scenic spots and nature reserves, for instance, could be charged higher in principle to prevent depletive consumption. City parks, memorials and exhibitions closely relating to residents' daily life should be priced lower with "full consideration" of the public's financial power.

Researcher Wen Guifang of the Institute of Finance and Trade Economics of the Chinese Academy of Social Sciences maintained the government was justified in reserving its pricing power for tourist sites as the "caretakers of the legacies of nature and ancestors".

"Such public resources should not be run for profits but be tapped as affordable public services accessible to all Chinese," he said.

To crack down on profiteering, the NDRC has forbidden the malpractice by tourist sites of charging extra to give juicy kickback. The discount rate for entrance fees to traveling tours has been capped at 20 percent while the preferential treatment should not go beyond the officially designated group of people which include children, students, minors, senior citizens aged 65 or above, the enlisted, the disabled and religious personage.

The document also required provincial price monitoring departments to take back their pricing rights from lower branches over "significant tourism sites", which analysts applauded as "a belated move to ease public grumbles over expensive scenic spots".

An ironic phenomenon pointed out by Wen Guifang is that significant tourism sites such as ancient mausoleums, famous mountains and nature reserves are often in less developed central and western interiors and function as a crucial source of local financial revenue.

To cash in on the resources, financial-strained local governments preferred to farm them out and were forced to walk the tight rope of considering both contractors' need for profits and the residents' right of easy access to public resources.

"This has triggered a ferocious competition of price rises, and goes against the justified intention of optimizing public services," Wen said.

Taking a glimpse of the quoted prices for prestigious scenic spots from the China Youth Travel Service for instance, one will spot a unanimous spike for peak-season admission fees, with Jiuzhaigou resort in Sichuan charging 310 yuan (44.34 U.S. dollars) and Lushan Mountain 200 yuan, a rise of 45 yuan to 150 yuan respectively from the off-season.

Compared to the 1,149 yuan average monthly disposable income for urban dwellers and the 349 yuan for rural residents last year, such admission charges remain forbiddingly high.

Wen recognized that the overhaul came after the NDRC released a detailed pricing method last February amid public grumbles over costly tourist sites.

Under that method issued to all provincial-level price monitoring departments, the NDRC has ordered governmental departments to alert the public of their price rise intentions at least two months in advance and banned tourist site management from using admission fee income to bankroll pay rises, bonus and other benefits distribution for employees.

Entrance charge should be raised at least every three years, it said.

NDRC spokesman Li Pumin warned Tuesday at the press conference violating governmental departments would face punishment in line with the Price Law.

But analysts said a long-term cure to the problem is to upgrade current fiscal system to make sure local finance is wealthy enough to deal with local capital input demand and simultaneously strengthen the supervision of the expenditure of transfer payment from central government.

Researcher Wen Guifang said the campaign had "negligible impact" on easing consumer inflation because tourism is light-weighted in the Consumer Price Index which eased to 8.3 percent in March from a nearly 12-year high of 8.7 percent in February.

"Accommodating and transportation account for the largest share of tourism expenditure. Admission charges are just negligible," he said. (1 U.S. dollar equals 6.99 yuan)


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