He said the government will eventually limit its intervention to the public service sector and let the market decide the prices of commodities of services.

"To protect the environment, however, the government will increase the prices of resources and the costs for environmental damage and ecological repair works," Xu said.

The government will also exert its macro-control functions through fiscal and monetary policies, instead of direct administrative intervention, he added.

Xu also said that China will improve its system to evaluate economic performance, placing greater emphasis on the quality of growth to curb local officials' obsession with GDP data.

The country will increase the weight of factors such as consumption of resources, environmental costs, work safety and local debt in assessing local economic growth. It will put more emphasis on employment, residents' incomes, social security and healthcare, he said.

"This is intended to lead local authorities to shift their attention to economic restructuring," he said, adding that the new mechanism will take regional differences into consideration.

In past decades, the promotion of Chinese officials largely hinged on economic performance, which prompted local governments to boost growth by investing in capital- and energy-intensive industries despite the environmental costs. As China tries to bring its economy onto a more sustainable track, central authorities have been at pains to change that.

Earlier this year, President Xi Jinping said the country will not assess the performance of officials simply based on their records of boosting the economy. He promised to adopt more comprehensive criteria.