China cancels price hike in May

The government canceled a price hike that was supposed to be implemented in May because of government concerns over the potential damage that sharp increases might cause to the Chinese economy. Media reports said the move could undermine the credibility of the country’s fuel pricing mechanism. A RMB520 (US$76.18) and RMB500 (US$73.25) increase in gasoline and diesel prices would have represented an 8% to 9% hike over the current average retail ceiling benchmarks. Under the current fuel pricing mechanism, domestic fuel prices should be adjusted when the moving average of a crude basket changes by more than 4% over a period of 22 working days, the National Development and Reform Commission (NDRC) said. The NDRC is China’s economic planning agency, which is responsible for energy pricing. (April 29/ May 11, 2009)