|
Home>News Center>China | |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Oil prices eating away at Chinese economy Overhauling the system would act as a brake on the economy, analysts said. Morgan Stanley has revised its 2006 GDP growth forecast down to 9.3 percent from 9.5 percent and to 6.7 percent for 2007 as a result of higher oil prices. The Asian Development Bank and the International Monetary Fund estimate a loss of about one percentage point next year. Carl Weinberg, of High Frequency Economics, said that the cost would be significantly higher -- and it would raise China's import bill by 47 billion dollars over one year. "We view this as a gross transfer of income to foreign oil producers, money that otherwise would have been spent at home," he said. It would trim 2.8 percent from GDP growth with 260,000 fewer urban jobs created, Weinberg estimated. Some economists are even more pessimistic, estimating that every 10 percent rise in oil prices represents a GDP reduction of 0.3 percentage points and an increase in the consumer price index of 0.4 percentage points. Deutsche Bank said China is about five times as energy-intensive as the US which means its takes five times as much energy to produce a dollar of GDP. "High oil prices, if they were to be passed onto domestic users, would seem to impose a greater burden on China's economy," the Deutsche Bank report said. High oil prices are becoming the norm and China's solution of forcing refiners to subsidize low petrol and diesel costs has to end, analysts say. Angry refiners, which posted losses of 4.2 billion yuan (517 million dollars) in the first six months, have called on the government to loosen its price policies after fuel shortages paralyzed southern parts of the country due to production cutbacks by refiners. The shortages in July and August were widely seen as artificial as refiners were reluctant to sell oil products at a loss. It is unclear how Beijing will respond amid growing calls for reform as it struggles to keep CPI at around two percent. "Can the government introduce price relaxations gradually enough so as to keep CPI at two-three percent a year?," asked Stephen Green, economist at Standard Chartered Bank. "The big worry is that these energy prices hit the economy all at once and CPI rises too quickly."
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
