Oil price increases unlikely to cause inflation
By Wang Ying (China Daily)
Updated: 2006-05-31 08:54
The recent increase in the price of oil products in China by at least 10 per
cent is unlikely to lead to inflation, analysts say.
"I am not worried
about inflation - the Chinese economy is developing steadily," said Zhou Fengqi,
an energy expert who previously worked at the National Development and Reform
Commission (NDRC).
The NDRC, China's top economic planning body, last
week increased the price of gasoline by 10.6 per cent, diesel by 12.3 per cent
and jet fuel by 10.3 per cent.
The wholesale price of gasoline and diesel
were separately raised by 500 yuan (US$62.5) per ton.
This is the biggest
increase for gasoline since 2003 and aims to close the gap between domestic and
international prices.
Niu Li, an economist with the State Information
Centre, said the price adjustment would have a very small impact on a country's
CPI (consumer price index).
"Some sectors, such as transportation, are
hurt most by oil price increases, but some others, like oil refining, are
beneficiaries," Niu said.
"So there is balance of losses and gains
across industries."
China's economy expanded by an annual average of 10
per cent over the past three years and rose as much as 10.3 per cent in the
first quarter as investment in factories, real estate and other fixed-assets
accelerated.
Oil majors in China have said higher oil prices may help cut
losses in their refining and retail businesses.
Industry analysts
predicted the country's oil refining business will become a "better prospect"
this year.
The central government limits the retail price of oil
products, such as gasoline and diesel, a pricing system that has caused the
country's oil refiners to struggle in the red as global crude prices
rise.
Since January 2003, China's benchmark prices for gasoline and
diesel have risen by 56 per and 50 per cent respectively, but crude prices have
doubled in that period, said Gordon Kwan, director of oil and gas research at
the Hong Kong-based brokerage CLSA.
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