The news left people on the streets relatively unmoved.

"The rise is only a few cents. Compared with other price hikes, this is really tiny," said Ye Zi, 30, a university lecturer in Beijing.

"People have got used to sending emails nowadays. Few people take the trouble to go to the post office and send a letter," said Wu Jun, 37, who works in an IT company in Beijing. Wu said he has not sent a letter for years.

China's postal system has suffered huge losses since 1998.

Official statistics show it suffered a loss of 398 million yuan (US$49.8 million) last year.

The State Council has approved the plan to establish a State-owned group with a registered capital of US$10 billion that provides postal service.

The State Postal Bureau will remain an administrative body.

The new group will provide services such as domestic and international mail, EMS, postal savings, postal remittance, circulation of newspapers and magazines, and postal logistics.

According to a government statement, the central government will stop subsidizing the group in postal businesses like EMS.

The move is expected to create a fairer environment for competition in the postal sector.

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