China is considering ways to introduce a new fuel pricing system that will allow it to respond more quickly to oil price changes in the global market, the head of the country's top economic planner announced Wednesday.
"The current fuel pricing mechanism fails to reflect the fluctuation of international crude oil prices in a timely manner," said Zhang Ping, head of the National Development and Reform Commission (NDRC), at a press conference on the sidelines of the annual session of the National People's Congress (NPC), China's legislature.
According to China's fuel pricing formula, which was introduced in 2009, the government may consider readjusting fuel prices if the moving average price for a basket of internationally traded crudes changes more than 4 percent over a period of 22 working days.
"We plan to shorten the 22-working-day reference period to make it reflect the frequent changes of international crude oil prices, and remove the 4-percent fluctuation threshold," Zhang said.
"The comment from the head of the NDRC means that the reference period for oil price adjustment in the country will be shortened to 10 days or even shorter," Han Jingyuan, an analyst at Beijing-based energy information provider JYD Commodities Hub Co, told the Global Times Wednesday.
"Removal of the 4-percent fluctuation threshold will make oil price adjustment more timely and regular. Given the influence of the interest rate, public opinion and inflationary pressure in the country, a special measure will be introduced in the oil pricing system to buffer against fast price changes," Han said.
The NDRC, which oversees the adjustment of China's fuel prices, announced it would raise fuel prices from February 25 against a downward movement of international crude oil prices, triggering widespread criticism from many who said the response was too slow.
In 2012, the NDRC raised fuel prices four times and cut them four times based on the current pricing mechanism.
Urbanization
"China is likely to unveil a blueprint to guide the country's urbanization drive in the first half of this year and allow it to advance in an orderly and healthy manner," Zhang of the NDRC said at the press conference.
Urbanization is an inexorable trend for development and the biggest potential force driving domestic demand in the coming years. The key to achieving success is to pay attention to the quality of urbanization rather than its speed and scale, Zhang said.
"In the past, China had focused on investment in land and infrastructure in order to promote urbanization, creating a lot of problems such as traffic congestion and environmental pollution," Ni Pengfei, director of the City and Competitiveness Research Center under the Chinese Academy of Social Sciences, told the Global Times Wednesday.
"The country's new urbanization drive should prioritize the people's need, increase the government's ability to serve the people and allow rural migrants to equally enjoy public services in cities including health care, housing and education," Ni said.
China's urbanization rate rose by 1.3 percentage points to 52.57 percent in 2012, and the government is aiming for 53.37 percent in 2013.
Overcapacity
The country will encourage mergers and acquisitions, eliminate outdated production and allow more companies to explore the overseas market to address industrial overcapacity, Zhang at the NDRC said.
Overcapacity has seriously plagued industrial sectors including steel, cement, electrolytic aluminum, plate glass and coal coke, which usually operate at 70 to 75 percent of their total capacity in China, Zhang told the press conference.
In the steel industry, for instance, the profit margin was only slightly higher than 1 percent, with many steel companies suffering losses, Zhang said.
"One efficient way to weed out outdated production capacity is to evaluate companies using a technology and emissions standard. Those who fail to meet the standard should be shut down or acquired by larger companies," Wang Guoqing, director at the Beijing Lange Steel Information Research Center, told the Global Times.
"The year of 2013 will see a wave of acquisitions and mergers in the steel industry," Wang said.
China will seek to bring 60 percent of the country's steel production under the control of its top 10 steel makers by 2015 and encourage large steel groups to acquire smaller firms in other regions, the Ministry of Industry and Information Technology said in January.
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