VZCZCXRO8800
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #0152 0161148
ZNR UUUUU ZZH
P 161148Z JAN 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 1907
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS BEIJING 000152 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM AND EEB/ESC 
TREASURY FOR OASIA/DOHNER, CUSHMAN 
 
E.O. 12958: N/A 
TAGS: ENRG EINV ECON EPET EFIN CH
SUBJECT: CHINA CUTS GASOLINE AND DIESEL PRICES, AGAIN 
 
REF: 08 BEIJING 04615 
 
¶1. (U) Official media reported on January 14 that China cut 
its benchmark retail gasoline and diesel prices by 2 percent 
and 3.2 percent respectively.  This is the first cut since 
China's new pricing mechanism took effect at the beginning of 
2009 (see Ref).  This move follows the Government's December 
19 move to cut the price for gasoline by 14 percent and 18 
percent for diesel.  After this price cut, gasoline prices 
for 93 octane have now fallen to RMB 5.44 per liter (3.03 USD 
per gallon).  (Note: Singapore gasoline spot prices are 
running around 1.13 USD per gallon at the moment.  End Note.) 
 
¶2. (SBU) Official media cited Xu Kunlin, Deputy Director 
General of the National Development and Reform Commission 
(NDRC) Pricing Bureau, as saying the cut is triggered by the 
crude oil price decline in global markets and that there is 
still room for a further cut in domestic fuel prices despite 
recent fluctuations in global prices.  An NDRC researcher was 
also quoted saying the price change "means domestic fuel 
prices will react more quickly to changes on the global 
markets in the future."  The NDRC, however, also said in a 
statement on its website that it is not appropriate that fuel 
prices be adjusted "too frequently."  Zhao Ying, Senior 
Researcher at the Institute of Industrial Research, Chinese 
Academy of Social Sciences, commented to Econoff on 16 
January that the fuel price decrease is one of a series of 
measures by the government to increase car sales and expand 
domestic internal demand.  Comment: This latest move can be 
seen as part of an effort to bring fuel prices into line with 
world prices and therefore as a market-friendly move.  But 
the small size of this price cut actually helps make up for 
refiners' losses incurred when retail prices did not cover 
the cost of inputs.  This move therefore has an 
interventionist aspect as well.  End Comment. 
 
Randt