It’s acknowledged by the reporters of ..........com, a joint announced has been made by Ministry of Finance, Ministry of Transport, Ministry of Agriculture and State Forestry Administration of the People’s Republic of China, in a bid to promote the developments of urban public transport, rural passenger transport, taxi, fishery, and forestry, China will adjust the subsidies mechanism for fuel consumptions in these aforementioned sectors, which means the conventional practice of linking fuel subsidies to the volume of fuel consumption will become history.

According to the Xinhua News Agency, the fuel subsidies adjustment, effective since January 1st, 2015, is aimed at further complete the subsidy mechanism, develop the resource allocation system into a market-dominated one, and promote the development of urban public transport, rural passenger transport, taxi, fishery, and forestry.

China will not adjust the total amount of fuel subsidies, but will allocate them in a more organized way with different priorities. To be more specific, fuel subsidies for rural passenger transport and taxi sectors will be allocated by local governments to support the structural adjustment in public transport, alternative energy vehicles, rural passenger transport and waterway passenger transport; fuel subsidies for off-shore fishery will be merged into China Central Government’s overall subsidies for ships, so as to support the exploitation of international fishery resources ,and the refresh and modification of ships; fuel subsidies for forestry will be merged into China Central Government’s overall subsidies for forestry and allocated accordingly.

From 2006 to 2014, China’s fuel subsidies to the urban public transport, rural passenger transport, taxi, fishery, and forestry totaled 504 billion yuan. However, the effectiveness of fuel subsidies has lessened year after year for the last 10 years, even though the size of the subsidies continues to grow, which calls for instant reform.

According to an official of the Ministry of Finance, adjusting China’s fuel subsidy mechanism is not only a significant reform in China’s fiscal management system, but also the only way to promote structural reform on the supply side and the development in an environmental-friendly way.

Provincial governors shall assume overall responsibility for the adjustments in China’s fuel subsidy mechanism, and all relevant departments of all levels shall collaborate closely and carry out their duties respectively, so at to secure the promotion of reform.