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Inflation fears block fuel price rise

By Fu Jing (China Daily)
Updated: 2007-07-26 08:53

Rising global crude oil prices on the one hand and the growing domestic inflationary pressure on the other have put the government in a difficult situation, making it extremely difficult for it to decide whether and when to raise gasoline and diesel prices.

Cao Changqing, pricing department director of the National Development and Reform Commission (NDRC), said skyrocketing global crude oil prices are putting pressure on China to adjust its domestic prices but the government hasn't done so yet mainly because of the fear of adding to inflationary pressures.

He said the government is considering subsidies for crude oil refiners to help them meet the growing demand.

While admitting "the dilemma" in deciding on a gasoline price hike this time, the official said the government is committed to letting "market decide gasoline prices" finally. "Our price reform is aimed at uniting the domestic and international prices of refined oil and diesel."

Cao said China needs to adjust its refined oil prices as international prices rose to an average of $72 a barrel last week. China's crude oil prices have already been linked to the global market but the government still regulates the gasoline and diesel prices.


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