In the operation of a socialist market economy, pricing mechanisms play an important role in optimizing resource allocation and promoting a balance between supply and demand. China's pricing law is an important law regulating price relations and price behaviors among economic activities in the country.

To adapt to new situations and new needs, revising relevant provisions of the pricing law — especially improving the criteria for identifying unfair pricing practices such as predatory pricing and regulating price violations in accordance with the law — will help maintain a fair and competitive market environment, protect the lawful rights and interests of consumers and business operators, and promote the healthy development of the national economy.

First, it helps improve the practice using the rule of law in both pricing practice and policy. This revision of the pricing law adheres to a people-centered approach and insists that the rule of law serve the people.

In market economy activities, public demand and calls for fairness, justice, openness and transparency are growing stronger.At present, against the backdrop of oversupply in various products, some enterprises, in order to capture greater market share, are reducing costs and product prices by squeezing supplier profits, while some large enterprises squeeze small firms by delaying payments or extending payment terms.

Such "trading price for volume" behavior undermines the industrial collaboration ecosystem and the order of fair market competition.

For such acts of abusing market dominance to squeeze upstream and downstream suppliers or industry competitors, the call among enterprises for solutions has grown increasingly commonplace.

Therefore, actively responding to the needs and voices of the public and enterprises, amending and improving the criteria for determining "predatory pricing", and strengthening the regulation of such violations embody the sense of responsibility and action of a law-based government.

Second, it represents a clear example of giving better play to the government's role and strengthening the construction of the rule of law in pricing.

The government's "visible hand" should function not only in areas of government pricing, but also in areas of market-regulated pricing, including the regulation of unfair pricing practices. Even in areas with market-regulated prices, market failures can occur.

For example, "predatory pricing" is an unfair practice intended to drive out competitors or monopolize the market by selling goods or providing services below cost, disrupting the normal order of production and business operations, and harming national interests or the lawful rights and interests of other operators.

In terms of harm, predatory pricing is a form of cutthroat competition, leading to declining or even widening losses in industry profits, increasing pressure on enterprises to maintain stable operations and expand jobs, and adversely affecting income growth for households, especially low and middle-income groups.

In summary, in areas involving major matters of public interest and serious market failures, it is necessary for the government to actively act, strengthen the implementation of the rule of law, enrich regulatory tools and help remedy market failures.

Third, it is an important guarantee for improving the system of price-related rule of law and enhancing the capacity to govern prices according to the law.

To steadily advance high-quality economic development and continuously optimize the economic structure, pricing mechanisms must accurately transmit supply-and-demand signals.

Revising and effectively implementing the pricing law and related laws and regulations are key to respecting the market pricing laws and fully leveraging the market's role in price formation.

Especially against the backdrop of increased uncertainty on the international stage, legislating to strengthen and guide fair, just and lawful price competition will help enhance the appeal and influence of China's unified national market, both domestically and internationally, thus providing a sound pricing environment for strengthening the domestic economic cycle.

Also, business operators' right to set prices independently is a right granted by the pricing law and is a legitimate means for operators to make profits in their economic activities.

From the perspective of maintaining the value orientation of fair competition, independent pricing behavior should be consistent with market supply and demand and with the operator's own cost structure of production and operations.

If an operator engages in unfair pricing practices that prevent prices from effectively reflecting market supply and demand dynamics — or production and operating costs — or even cause pricing mechanisms to fail in certain industries or links, then negative chain reactions will very likely occur.

Particularly given the current prominence of cutthroat competition, relevant provisions in the pricing law need to be further improved.

One of the focuses of this revision is improving the criteria for identifying predatory pricing, and removing incentives that prompt other operators to engage in price manipulation, explicitly defining it as an "unfair pricing practice".

At the same time, it must be recognized that amending the law is only the first step in strengthening regulation, and the key is to ensure that laws are followed, and that enforcement is strict.

If relevant departments strengthen market pricing regulations in accordance with laws and regulations, they will effectively curb unfair pricing practices and genuinely maintain a fair and competitive market environment and sound pricing habits.

Third, high-quality development requires actively promoting fair competition throughout the society.

While confirming and protecting the right of operators to independently set prices and lawfully make profits, the pricing law also stipulates that independent pricing must follow the principle of honesty and good faith.

Honesty means being open and genuine in goods and pricing. Good faith means keeping promises and delivering on commitments.

In terms of price-related activities, failing to truthfully present product information, passing off substandard goods as high-quality, adulterating products, or using lawful behavior to conceal unlawful aims all violate the principle of honesty. Breaching agreements or failing to fulfill promised obligations violates the principle of good faith.

When pursuing market share, sales volume and revenue, operators must also actively shoulder certain social responsibilities, abide by public order and good customs, and jointly maintain a sound industrial ecosystem.

For example, as part of improving internal governance, enterprises should — based on their operating conditions — improve internal price management systems as well as strictly follow national financial and economic laws in terms of cost accounting and expense allocation.

At the same time, when market regulatory authorities at all levels conduct price supervision and inspection, operators must truthfully provide any materials needed for occasional investigations.

In this regard, the pricing law explicitly stipulates that refusal to provide materials required for supervision, inspection, cost monitoring or investigation in accordance with regulations shall be ordered to be corrected and those in noncompliance will be issued warnings. Failure to correct such behaviors within a designated time limit may result in fines.

This revision of the pricing law sends a clear signal of maintaining a fair and competitive market environment.

By deepening the construction of rule of law-related pricing practices, the efficiency and quality of economic operation can be further improved, playing an important role in achieving high-quality development.

The writer is deputy director of the Chinese Academy of Macroeconomic Research's Economic Research Institute.

The views do not necessarily reflect those of China Daily.