In the beginning of July, global crude oil prices continued to rise beyond 140 US dollars a barrel. The price of China's gasoline and diesel products had already risen prior to this. Mr. Liqun Jin, Vice President of the Asian Development Bank, said several days ago that it is "urgent and necessary" for China to raise the price of domestic oil products accordingly. It will help lessen the discrepancy between domestic oil prices and global crude oil prices, straighten out price relations, and encourage the economical use of oil.
The government takes measures to protect the livelihood of the people
"The increase in oil prices has been a cause of worry, but the government will give us subsidies. We are still optimistic about the future prospects of taxi driving," said Wang Shibo, a taxi cab driver in Beijing. From June 20 onward, the price of 93 grade gas rose from 5.34 to 6.20 yuan per liter, an increase of 0.86 yuan. When filling up his car with 30 liters of gas, Mr. Wang paid 25.80 yuan more than he would have before the price increase. The price of oil has risen, but taxi drivers everywhere remain calm. This is also representative of the overall public reaction.
After adjusting oil prices, the government immediately gave 19.8 billion yuan in subsidies to the fishing industry, forest industry, urban public transportation, rural roads and transportation, urban taxis, and grain and rice farmers.
At the same time, relevant ministries quickly announced that during the period before taxi rates change, the central and local finance bureaus will provide the taxi industry with a subsidy. Furthermore, they have required the subsidy to be delivered as quickly as possible in cash to cab drivers.
It is necessary to loosen price controls on oil
Industry experts say that loosening price controls on oil products is a necessary course of action. The recent price adjustment is no different than previous price adjustments; the price has merely increased by a slightly higher amount this time. In order to straighten out the prices of oil products, the country has increased the price of domestic oil products by a small increment, gradually reducing the difference between domestic and global oil prices.
Experts have given three reasons for this course of action: first, given the discrepancy between domestic and foreign oil prices, loosening price controls indicates that oil prices are rising significantly, but at present the nation's macroeconomic controls aim mainly to guard against inflation. In an environment where commodity prices continue to rise and inflationary pressure does not decrease, price controls on oil cannot be completely loosened. Second, because of the lack of a strong petroleum futures market, the quality of management and technology in domestic oil companies is rather lacking, and they cannot shoulder the cost of such pressure on their own. This was a factor that led up to the loosening of price controls. The loosening of controls also serves to break up the monopolization of the industry and develop a more market-based premise. Furthermore, at present, energy resources are scarce, and in an environment where oil prices are shooting upward, petroleum is a strategic resource tied to national security. The fact that this country is a latecomer in the global oil market means that it lacks the ability to compete with that market, and thus confirms the necessity of protecting the administrative monopoly over the oil industry. It is not yet time to remove all controls on oil prices. Third, this country's strategic oil reserves are still at an early stage. They are far too low to influence the market. Oil companies also do not have the ability to counteract international oil giants. At present, it is too risky to lift price controls. Therefore, we must be careful and prudent.
New energy industry produces more opportunities
European Union expert Freeman said recently that the Chinese government's decision to increase the price of oil products is in accordance with both short term and long term interests. From the short term perspective, China's oil price increase helps stabilize domestic supply. From the long term perspective, adjusting oil prices helps China strengthen conservation practices and reduce emissions of greenhouse gases.
The Asian Development Bank estimates that up to 2030, Asian countries will need 64 trillion US dollars worth of investment in new energy sources. Mr. Gu Jie, Deputy Director of the Investment Promotion Agency of the Ministry of Commerce, said recently that with global oil prices continuously rising, China's new energy industry is producing more investment opportunities. In accordance with the "New Energy Law," "Renewable Energy Law" and their related publications, the country is continuously expanding policy support and providing a large market space for the industrialization of new energy sources and renewable energy.
Experts have pointed out that the recent increase in oil prices is not a one-time event. It is a change in the pattern of the government's actions. China's public finance system has finally decided to reduce the huge amount of subsidies for energy companies and to use those extra funds for people and businesses that are even more in need. This indicates the government is adjusting the economy to a more market-regulated model and is using a larger amount of its limited public resources to help populations in need.
While increasing prices has placed heavy cost pressures on manufacturers, it also eliminates some inefficient, wasteful, and environmentally harmful manufacturing practices and contributes to shifting away from exports toward domestic demand. This has long term benefits for holding back inflation, reducing carbon emissions, and protecting the environment. It also helps improve China's overall living environment. Furthermore, it will reduce urban traffic congestion and air pollution, and lower the number of victims of car accidents. For China's automobile factories, this will lead to technological advancements, energy-saving production techniques, and more environmentally friendly cars.
By People's Daily Online
|
Comment
Tell A Friend
Print Format
Save Article