China
Written on July 9, 2008
China should eliminate energy price controls “as soon as possible'' to prevent shortages, central bank adviser Fan Gang said.
“Under-priced energy is distorting market demand and supply and causing shortages,'' Fan said at a forum in Beijing today. “The government should resolve such price distortions as soon as possible.''
China raised retail fuel prices by at least 17 percent on June 20 to improve refiners' margins, encourage production and ease shortages as international oil prices soared. The move may add as much as 1 percentage point to inflation this year, according to a Bloomberg News survey of economists cashadvance.
“Relaxing controls on energy prices may cause temporary pressure on inflation, but it is for the long-term good of balancing economic growth,'' said Fan, director of the National Institute of Economic Research in Beijing and a member of the central bank's monetary policy committee.
May's inflation was 7.7 percent, down from the 12-year high of 8.7 percent in February.
Filed in: online.