China will establish a market-based electricity price mechanism to lower power costs for enterprises, according to a State Council executive meeting on Sept 26 chaired by Premier Li Keqiang.

At present, market transactions of coal-generated electricity accounts for nearly 50 percent of the total, with prices dramatically lower than the benchmark on-grid price fixed by governments.

China will from Jan 1, 2020 abolish the coal-electricity price link and establish a market-based system composed of benchmark and fluctuating prices.

The benchmark will be determined by the current on-grid price of each region and the fluctuation should be between 10 percent higher and 15 percent lower of the price, according to the meeting.

The power price will be decided by power generation companies, power sales companies, and consumers through negotiations or bidding.

But the price is set to remain stable next year, while the average electricity rate for general industrial and commercial use will be reduced.

Premier Li called for stability of electricity tariffs for private citizens and agricultural production and price cuts for general industrial and commercial use.

Manufacturing is the foundation and buttress for economic development, the Premier said.

As it is facing difficulties at the moment, multiple measures should be adopted, including reducing power costs, he said.