So, they've raised the price of fuel. So much for the talks that they wouldn't do this or let the stock markets dive just before the Olympics.
Some short term pain for long term gain.
China Raises Fuel, Power Prices to Curb Energy Consumption
By Wang Ying and Theresa Tang
June 20 (Bloomberg) -- China, the world's second-biggest oil consumer, will raise gasoline and diesel prices by at least 17 percent as of today and increase power tariffs to rein in energy consumption and slow the economy.
Gasoline will increase 17 percent to 6,980 yuan ($1,015) a metric ton from 5,980 yuan, diesel will rise 18 percent to 6,520 yuan and jet fuel will climb by 1,500 yuan, or 25 percent, to 7,450 yuan, the National Development and Reform Commission said on its Web site yesterday. On July 1, China will boost electricity prices by an average 0.025 yuan a kilowatt-hour and cap thermal coal prices until the end of this year.
The Chinese authorities want to curb growth and ease pressure on the state-owned refining companies which have been hurt by rising oil costs. The move, which risks boosting inflation, follows similar fuel price increases in India, Malaysia and Indonesia.
``This pushes inflation up in China but contributes to easing inflationary pressure elsewhere in the world,'' Merrill Lynch & Co.'s head of global commodities research, Francisco Blanch, said by phone yesterday.
China Petroleum & Chemical Corp. and PetroChina Co., the nations two largest oil refiners, surged in U.S. trading. Sinopec, as China Petroleum is known, rose $1.37, or 3.4 percent, to $42.20 at 1:32 p.m. in New York yesterday, while PetroChina gained $5.85, or 4.4 percent, to $140.38.
Energy Use
The country must cut energy use by at least 5 percent for every unit of gross domestic product annually for the next three years to meet its 2010 objective, Yang Tiesheng, director of the commission's energy efficiency division, said at the Energy Efficiency Asia conference in Beijing yesterday.
``It is an extremely difficult target to meet, but I'm optimistic that the government will achieve it by making the utmost effort,'' Yang said.
The country cut energy use by 2.62 percent for every 10,000 yuan ($1,454) of GDP in the first quarter compared with a year earlier, an NDRC official said. The government aims to pare energy use by 20 percent for each unit of GDP in 2010 from 2005 levels.
The world's fourth-largest economy expanded 10.6 percent in the first quarter from a year earlier, the ninth straight quarter of double-digit growth. Driving the expansion were factories powered by dirty coal while the wealth following the nation's economic expansion spurred car sales and fuel demand.
Environmental Tax
The government is considering a so-called environmental tax, a new levy on auto fuels and changes to existing taxes on natural-resource use, Fu Jing, deputy director of policy and legislation at the State Administration of Taxation, said at the conference.
China may tax the use of products that pollute the environment or aren't energy-efficient, the China Securities Journal reported yesterday, citing Vice Finance Minister Zhang Shaochun.
The nation seeks to reduce energy use for each unit of GDP to 0.98 ton of coal equivalent by 2010 from 1.22 tons in 2005, Yang said today. China used 1.17 tons for every unit of GDP last year, Xu Dingming, director general of the commission's energy bureau, said in February.
China's largest investment bank said earlier this week the country, the world's biggest energy consumer after the U.S., should raise fuel prices by 50 percent to improve energy efficiency.
The nation needs to increase oil-product prices as rising subsidies pose ``considerable risks'' to fiscal sustainability, China International Capital Corp. economists including Ha Jiming and Gao Ting wrote in a report on June 16.
The level of international oil prices depends ``to a significant degree'' on China's energy pricing policy, as the country accounts for about 40 percent of the increase in global consumption, the bank said.
To contact the reporter on this story: Wang Ying in Beijing at
[email protected]; Theresa Tang in Hong Kong at
[email protected]
Last Updated: June 19, 2008 13:44 EDT
