China has raised fuel prices for the second time this year as it tries to get to grips with the rising cost of crude oil. Gasoline and diesel are to be subject to 6.4 point and 7 point cost increases respectively.
On Monday, China’s primary economic planning institution, the National Development & Reform Commission, announced that the price on both retail fuels would be raised by ¥600 apiece, raising the cost of diesel to ¥9,130 a tonne, and gasoline to ¥9,980.
The move represents significant progress in both domestic energy and economic policy, and suggests the political establishment is getting increasingly comfortable with the concept of inflation. In previous years, the government has employed a strict strategy of price controls to stifle the impact of rising energy prices, but has allowed slight increases in recent months.
At the weekend, Chinese Premier Wen Jibao issued a statement asserting that the Chinese government will continue to offer oil subsidies if international oil prices increase. Western sanctions against Iran, the world’s fifth largest oil producer, have forced global oil prices up further than ever in recent weeks.
