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China lifts gasoline, diesel prices

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On Wednesday afternoon, hours before the government's announcement, there were rumors on the Internet. That resulted in many consumers lining up at gas stations.

A worker fills the tank of a car at a gas station in Dalian, Northeast China's Liaoning province, April 6, 2011. [Photo/Asianewsphoto]

At a Sinopec gas station near the North Fourth Ring Road in Beijing, Tian Yuanyuan, who works for a private company, said the surging price of oil has become a daily burden. "If the price of gas continues to rise, I will sell my car immediately because no one can afford to drive anymore," said Tian, who drives to work every day because of the distance between her home and workplace.

Zhang Lijun, who operates a small business in Beijing, also complained about the price surge. "China's public transport system is not as advanced as that in Japan, and people want to drive under certain circumstances," he said, adding that he only drives when he has to go outside the Fourth Ring Road, but travels by bus or the subway within the Fourth Ring.

Public anger over the rise came as the profit of China's major oil producers' increased on higher crude prices. China National Offshore Oil Corporation Ltd, the country's biggest offshore oil and gas producer by sales, said last month that 2010 net profit surged 84.5 percent.

China Petroleum & Chemical Corp, China's biggest oil producer by sales, also said in March that its 2010 full-year net profit rose 14 percent, as higher oil prices and fuel sales offset lower refining margins.

"The public anger is understandable, but the recent uncertainty in Libya and some Middle Eastern countries also pushed up the international oil price, which has inevitably affected the Chinese market," said Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University. Liu said a possible solution would be for the government to cut oil taxes to help reduce prices.

Zhuang Jian, a senior economist with the Asian Development Bank (ADB), said the price rise will have some negative effect on the nation's consumer price index and GDP growth for the rest of this year.

ADB said in an annual report released on Wednesday that China's economy is expected to grow 9.6 percent in 2011, as fixed asset investment remains a key driver.

Cao from the NDRC said that if taxes - which analysts said account for as much as 30 percent of the total oil price -- are excluded, the price of domestic refined oil is the lowest compared with the world's major economies.

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