Does natural gas pricing reform establish an effective mechanism in China: A policy evaluation perspective

China's natural gas consumption has grown rapidly over the years, but the price mechanism was distorted by cross-subsidy and price inversion for a long time. In June 2013, nationwide pricing reform was implemented in the non-residential sector. To explore the effect of the reform on price distortion, this paper uses monthly data from 27 key cities to estimate the scale and rate of natural gas price subsidy from 2008 to 2017. The results show that the natural gas subsidy remains a large scale, but varies across sectors. The time interval in the implementation of the policy provides a quasi-natural experiment for studying the reform. The difference-indifference-in-difference estimations prove that the natural gas pricing reform has significantly eliminated the subsidy rate in the non-residential sector, and an effective terminal pricing mechanism has been conducted. Considering that energy subsidy is a global issue, the experience of the pricing reform in China may be extended to emerging and developing countries.