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China's gasoline prices now higher than the U.S.

Monday, March 26, 2012 - 02:28

March 26 - Chinese businesses feel the heat as fuel prices hit record levels following two hikes in six weeks. Arnold Gay reports.

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At $1.30 per litre, the average Chinese car owner now pays more than his U.S. counterpart to drive his car. In a move to curb the use of fossil fuels by the estimated 79 million cars that run on China's roads, Beijing raised pump prices by 10 percent last month (February). The hike is the second in less than two months, and makes fuel prices roughly 20 percent higher than in the U.S. Local gasoline prices are now more than 50 percent higher compared to pump prices three years ago. Beijing cushions some of the impact via subsidies to more vulnerable users like taxi drivers, farmers and fishermen, but offers no help to factories, miners or logistics firms. Driver Ding Shubiao says his firm is feeling the strain. (SOUNDBITE) (Mandarin) 40-YEAR-OLD TRUCK DRIVER DING SHUBIAO SAYING: "Our team has dozens of trucks. If one litre cost an extra half a yuan, and each truck takes over 400 litres of diesel, then we lose 200 or 300 yuan for each vehicle. For several trucks, we lose 10,000 yuan. So we lose around 10,000 before a job's even finished. So think how many tens of thousands we lose in a year." Asian Development Bank economist Zhuang Jian says the higher fuel costs could make Chinese firms less competitive compared to Indian companies which still enjoy fuel subsidies. (SOUNDBITE) (Mandarin) SENIOR ECONOMIST WITH THE ASIA DEVELOPMENT BANK ZHUANG JIAN SAYING: "If the price of oil goes very high, it will have an effect on various industries, and ultimately will slow their speed of growth. In the medium and long term, it can have a negative impact in many areas." For now, wealthy Chinese are still expected to pursue a developing taste for large vehicles, but retailers like BYD's Zhang Zhijin say they sense a trend towards more energy efficient cars among lower-income buyers. (SOUNDBITE) (Mandarin) BYD RETAIL MANAGER ZHANG ZHIJIN SAYING: "Because ultimately this market is mainly made up of office workers. Various factors, like the increase in other commodity prices, will also mean that they look for a vehicle that saves on fuel." Some drivers, like this homemaker, say the record gasoline price means they will just cut down on their car usage and take more public transport. Arnold Gay, Reuters.

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China's gasoline prices now higher than the U.S.

Monday, March 26, 2012 - 02:28