China, the world's second-biggest oil consumer, will raise gasoline and diesel prices by at least 17 percent as of today and increase power tariffs to rein in energy consumption and slow the economy. Gasoline will increase 17 percent to 6,980 yuan ($1,015) a metric ton from 5,980 yuan, diesel will rise 18 percent to 6,520 yuan and jet fuel will climb by 1,500 yuan, or 25 percent, to 7,450 yuan, the National Development and Reform Commission said on its Web site yesterday. On July 1, China will boost electricity prices by an average 0.025 yuan a kilowatt-hour and cap thermal coal prices until the end of this year.
The bottom line. The markets always win. The Chinese bureaucrats had to let prices rise to discourage Chinese to consume gas.
The business cycle is alive and well even in China. Let prices rise. Let the market discourage the usage of goods and let the market place downward pressure on prices.
It is happening in the old USA and in China as well.
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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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