By Li Hong, People's Daily Online

The massive price rise of retail gasoline, ruled by the Central Government's National Development and Reform Commission on Monday, has drawn fierce criticism online from car owners and gas end users, for the decision apparently favors the two State-owned giant oil dealers: Sinopec and PetroChina.

Although the global crude price is hovering around 80 U.S. dollars per barrel, far less than its all-time high of 147 dollars set a year ago, the retail price at the pump in Beijing and many other Chinese cities has hit a historical high, after the Commission approved the latest gas and diesel price hike by 480 yuan (US$70) per ton from Tuesday.

The magnitude of the price rise is so astonishing that some have jabbed the disproportionate hike on China's economy recovering at the fastest pace from the recession. And, gripes like the government tentatively building up coffers of State-owned refiners at the cost of Chinese car owners are a legion.

Or, the government has other considerations. As an envious 8 percent GDP growth for 2009 is almost in bag, and an even stronger economic performance is envisaged for 2010, China might begin to rein in private consumption of vehicles. Buoyed by the Commission's earlier policy of halving taxation on small-emission vehicles, Chinese car aspirants have bought cars like potatoes since the beginning of the year. Now, with sales already exceeding 10 million so far this year, this country is set to surpass the United States as the world's largest vehicle consumer. As oil consumption soars, the government might find itself facing unprecedented pressure to provide supplies.

As expected, most automobile stocks tumbled Tuesday in Shanghai and Shenzhen stock exchanges, as investors worry the record-high gas price is certain to dampen car sales. However, stock prices of Sinopec and PetroChina dipped too after a short rally in the morning, possibly because investors do not believe the elevated pump price is sustainable, as the United States' unemployment rate is not declining, the credit crunch stubbornly refuses to go, and China's car ownership is not to grow much in 2010 after a voracious sale this year.

The government deems oil as a pivotal resource, and has steadfastly ruled out private dealing of the commodity. Despite the Commission's having overhauled the previous rigid price-setting mechanism, and moved to adjust retail price more in tandem with global price volatilities, many still believe the practice remains seriously flawed.

Chinese press has complained that the Commission has been "taking good care of" the bottom lines of the State-run refineries. It used to promptly raise fuel prices whenever the global market price rises, but does not show a fraction of that haste to cut prices, when world market price drops. Worse, the range of each price change is not kept proportionate with world fluctuations.

As car owners, China's evolving middle class could afford the burden of a higher gas price, and, they could bear the responsibility by paying more for the depleting rare resource. However, the Commission's tilting towards Sinopec and PetroChina by administrative pricing to pump more profits for them is not fair, and runs against marketplace law.

Everybody knows that free market competition yields efficiency and fairness. I am no economist of whatever schools, and I don't embrace laissez-faire style of economy. But, for a country as big as China, to put banking, insurance, telecommunications, air and rail transport, energy, and public utilities including tap water and cooking gas all under government control is questionable. Poor services provided by State-owned telecom and rail transport monopolies have in the past few years generated the most complaints from the public.

The global financial crisis might tell us that, perhaps, the banking industry ought to be vigorously regulated by the central government, for it provides the life-blood of an economy. Outsized bankers, if not put under strong oversight, may act to take excessive risks to enrich themselves but endanger the whole system. Other sectors could be allowed a window of opening to private entrepreneurship, to ensure competition and thus better service for consumers.

Will more pump stations invested by private businessmen in Chinese cities hamper the country's energy security? It's worth thinking.