Microsoft (MSFT) China has announced plans to reduce the retail prices of its Windows and Office software prices in China by up to 60%.

Microsoft says for a full year until December 31, 2009, the company will reduce the suggested retail price of its Simplified Chinese Home Edition Windows XP software from CNY960 to CNY399, a decrease of 58.4%. At the same time, the price of its three-installation packages of Office Home and Student Editions are decreased from CNY699 to CNY398, while its National Day holiday promotion of Office 2007 Home and Student Editions for CNY199 will last until the Spring Festival. The price of Windows Vista home edition maintains its price at CNY499.

In addition, Microsoft will provide free phone support service to users of authentic software until March 31, 2009.

According to an insider from Microsoft China, the CNY399 Windows XP software is probably the cheapest among similar products across the world. This is a special offer for Chinese consumers alone.

The prices from the American Internet shopping website Amazon.com show that the price of both the Office Home and Student Editions on the website is USD84.99, which is about CNY580, and the price of Windows XP Home Edition is USD98.99, which is about CNY680.