Friday, June 20, 2008

Fueling Change

Thursday, Beijing announced a 17% rise in fuel costs for private cars (12 cents per liter), 18% increase for diesel, and 25% increase for jet fuel. There will also be an increase in electricity prices. Most people were expecting that the cheap gas (approx. $2.50/gallon) would last until after the Olympics. Beijing decided that the price increase would take effect midnight Friday, which caused long lines at gas stations across the country of drivers trying to save money. The government will also offer subsidies to some industries affected by the new policy (i.e. taxis, buses, grain producers).

This is certainly a good move by the Chinese government. Gas prices are extremely cheap here. The people who own cars tend to be the wealthy elite of the country who could afford an increase in costs. With any luck, this price hike will change some driving habits. If those habits change, the air quality in and around Beijing may improve slightly prior to the opening of the Olympics. This will also help ease the strain on supply here in Shenzhen as many Hong Kong drivers have been crossing the border to the Mainland to fill up on cheap gas.

This move comes on the heels of the plastic bag ban from June 1. If these policies hold, China will be making great strides toward improving the environment. The international community will have to wait and see what further moves Beijing makes for benefit of everyone.

However, not everyone is pleased with this decision. Many Chinese citizens believe that this move by the government will seriously harm many industries, thus destroying the national economy. Personally, I have seen a lot of waste in business (i.e. opening windows and doors with air conditioning running on high) , and believe that this should change many habits that will improve business in China.


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