The National Development and Reform Commission (NDRC) on Monday removed price controls on a range of products introduced in January as an anti-inflationary measure.
In a statement released on its website, the commission also called on local pricing departments to take "cautious steps" to ensure market stability and prevent abnormal price fluctuations.
The NDRC introduced price freezes on several products, including grain, edible oils, meat, milk and eggs, at the start of the year in response to concerns that a soaring consumer price index (CPI) would lead to high inflation.
The CPI hit 4.8 percent last year, well above the government's target of 3 percent.
However, despite the deepening global economic crisis, in October the index slowed for the sixth month in a row, to 4 percent.
Experts and banks have predicted the rate will fall to between 2.8 and 4 percent for November and December.
With prices seemingly under control, the government has now fixed its sights on stimulating the economy.
Du Ying, vice-minister of the NDRC said on Monday that this year's grain yield is on course for a record high of 525 million tons.
Speaking at an agricultural conference in Anhui province, he said that the forecast fifth consecutive bumper grain harvest - the first time since the founding of the People's Republic in 1949 - will help boost public confidence in the stability of the nation's economy.
However, as the impact of the US subprime crisis deepens in China, next year will be "extremely tough" for agricultural and rural development, Du said.
Falling prices and quality concerns over agricultural products, and a troubled labor market for migrant workers are the major problems facing the countryside, he said.
Dwindling foreign demand has resulted in between 5 and 7 percent of China's 130 million rural migrant workers returning home early for the Spring Festival, and their employment prospects are set to worsen after the holiday, he said.
That will be bad news for the country's farming families, as 45 percent of their income comes from migrant workers, Du said.
Increases in migrant workers' wages have accounted for 70 percent of all farmers' income growth, he said.
The government has promised to double the average disposable income of farmers to 10,000 yuan ($1,500) by 2020, which will require average annual growth of 5.95 percent, Du said.
This year, farmers' incomes are expected to exceed 4,600 yuan, up 6 percent from last year, he said.
(China Daily?December 2, 2008)