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Oil Price Hike Scares off Chinese Car Buyers

Chinese gasoline consumers are bracing for another wave of price hike as oil prices on the US market hit a 13-year high recently. 
Will it scare away potential car buyers in China, especially those SUV fans?

A latest media research in Beijing indicates that some people have INDEED delayed their plans to buy new cars. This dealer has already felt the cooling down.

"Of course, some people would say to themselves: wait a minute, is it a more wise idea to simply spend the money on taxi?"

But for those already driving, they care more about what's going on behind the price tag.

A Ministry of Construction think tank researcher Chen Huai says he see no need for the fuss about the oil price fluctuation.

"Global oil consumption and output are still basically balanced, or maybe output even still offset consumption a little bit.

OPEC's decision to cut production is based on an intention or raise the price when it's not satisfied with the current level. Don't forget, we've also experienced sharp falls the past couple of years."

Mr. Chen also attributes the chain reaction in the Chinese gasoline market to the country's currency being closely pegged to the US dollar.

"Precisely speaking, the oil price against the US increased. European and Japanese consumers may feel less pressured now that their currencies have hardened against the dollar over the past year."

But the policy-making advisor says the degree of the RMB's flexibility should be decided based on the overall economic situation of the nation, not only on oil demand and supply.
(CRI May 10, 2004)

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