Beijing tries to ignore the law of supply and demand by refusing to raise prices

By Aussiegirl

The Chinese try to wrestle the law of supply and demand to the ground. It wasn't part of Marx's theory -- so it therefore can't possibly be true -- can it?

FT.com / World / Asia-Pacific - Beijing defends stance on petrol prices: "China has defended its refusal to lift pump prices to keep pace with rises in the global oil market over the last 12 months, saying further increases would damage local industries, the military and the economy.

Zhang Guobao, vice-chairman of the National Development and Reform Commission, the chief economic planning body that is also responsible for energy policy, acknowledged that Chinese rises had been allowed to fall behind the world, but said the issue was “complicated”.

The NDRC has mandated three increases since May this year, increasing pump prices by a total of about 25 per cent, compared with rises in global crude of about 65 per cent since the start of the year.

Mr Zhang, at a press conference in Beijing, identified three sectors that were particularly vulnerable to oil price rises: the taxi industry, agriculture and the military.

He said oil price increases would result in fewer people taking cabs, causing hardship to the industry, and prompt less “enthusiastic” efforts at production by farmers.

“Our military is using oil, in ships, planes, tanks and other vehicles, and all of it is paid for by the state, so this is an issue that requires a lot of thought,” he said.

China, especially in the south, has experienced oil shortages in recent months, partly because of the NDRC’s price controls. The local oil majors all but stopped selling imported crude because of the huge losses they were incurring.