The Ministry of Railway last week unveiled its plan for price hikes during the forthcoming Spring Festival period.

Ticket prices for passenger trains can float upward around 15-20 percent during the peak traffic time when people rush home for a family gathering.

It is not the first time the railway department has raised prices for the holiday rush. Still, the move has aroused widespread attention and ignited heated public debate.

Public questioning and criticism over the practice has never receded in past years, but instead has become increasingly louder.

That's not surprising, considering the huge number of rail passengers during the most important traditional festival. And while the price hike is perhaps not that dramatic, it's still significant in terms of public impact.

Confronted with routine annual price hikes, the public is well-positioned to question whether the railway department has the right to charge more when millions queue for trains for a get-together with their families.

Pricing is based on the relationship between supply and demand. Trains are in an apparent short supply during the Spring Festival, so in order to divert passengers from the overcrowded carriages price hikes become a reasonable choice.

Sounds like a strong argument. And the railway department, in fact, has clung to that logic in order to justify the hikes.

A second thought on the argument, however, exposes its shaky ground.

For the hundreds of millions who have worked far away from home, the additional costs for train fare can by no means flush their desire to see their families, but only strain their budgets -- especially the budget of those poor farmers-turned-migrant workers.

On the other hand, the principle of rising demand leading to increased prices should be applied to a market with competition. The railway sector in China, however, operates in an obvious monopoly. It plays the dual role of both an enterprise and an institution under the auspices of the Ministry of Railways.

The sector may defend its bar of competition by claiming that the railway should be run in a natural monopoly. Even in that case, it should bear in mind that the operation of a sector in a natural monopoly is characterized by its service for the public interest, and not allowed to raise service prices randomly.

(China Daily December 8, 2003)