Speaking in Chengdu on Monday, Chen Deming, vice minister of the
National Development and Reform Commission, announced that China
would soon alter its refined oil pricing mechanism as well as
imposing a fuel oil tax.
The oil pricing mechanism, and any reform altering its
structure, will be pegged to international oil price fluctuations
although the adaptability of normal citizens will be taken into
account, said Chen.
The mechanism exists to bring domestic refined oil prices in
line with international equivalents.
The vice-minister has revealed that in order to sweeten the
reform, subsidies would be attributed to certain sectors such as
those related to food production, urban transportation, agriculture
and forestry with low-income groups also receiving specific
Chen also announced the upcoming imposition of a new fuel oil
To date, the Chinese government has only taken domestic
conditions into account when endeavoring to set fair pricing for
oil products. However, the rapidly fluctuating international market
has left it with little option other than to revise this
In March 2006, China first attempted to raise refined oil
prices, also creating a mechanism which would offer subsidies to
disadvantaged communities and public service sectors whilst also
levying fees from producers selling domestic crude oil.
The concept of a fuel oil tax, first touted back in 1994 but
delayed ever since due to the excessive burden it would bring to
bear on bus and taxi drivers, is being considered by experts as
only being possible should domestic refined oil prices see a marked
(Xinhua News Agency April 3, 2007)