China had overpaid foreign exchange US$7.24 billion (RMB60 billion yuan) for importing crude oil last year due to the rise in crude oil prices in the international market. The total operation cost for national economy in China has been increased. Some wealth created has been transferred into the hands of the crude oil suppliers. Meanwhile, the gasoline and diesel prices in China have been raised four times and twice respectively since last year resulting in a significant influence to the national economy. The reason is that Chinese pricing mechanism needs to be reformed. There are two common defects in the plans issued since 1998 for linking to the international market: (1) the prices of oil products in China do not reflect the supply and demand of petroleum in China; (2) Lagging behind the international price of oil products, the prices of oil products cannot link in the international market completely.
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