China said Thursday night that the country will raise the prices of gasoline and diesel oil by 16% and 18% respectively in response to rising energy prices, according to the New China News Agency, the English language version of China's official Xinhua News Agency.


The move comes as many U.S. importers are shifting pr0duction to other countries because of rising costs in China.

 

Aviation kerosene and electricity prices will also be increased while the prices of natural gas will be left unchanged, the national Development and Reform Commission (NDRC) announced.

The price rises translates into mark-ups of 0.8 yuan (12 cents)  and .02 yuan (13 cents) per liter.  The commission said the oil price adjustment was made to ensure supplies in the country by diminishing the gap between continuously rising international crude prices, especially since February, and state-set domestic oil prices.


Crude oil price on the international market reached above $136 dollars per barrel on Wednesday, up more than 45 percent since China last raised its prices in November. Traders attributed a $5 per barrel decline in futures prices for oil Thursday to the announcement.


One NDRC official said the government's price controls were causing some domestic refineries to stop or cut back on processing to avoid losses.


The commission said more subsidies would be offered to farmers, public transport, low-income families and taxi drivers to cushion the crunch of price rises.


The commission said fares for passenger travel by rail, urban and rural public transport and taxis would remain unchanged after the rise.


The official did not comment on the impact of oil price rises on the inflation rate, which eased to 7.7 percent in May. In April, it rose 8.5 percent after a 12-year high of 8.7 percent in February.


The commission also said the average electricity tariff will be raised by 2.5 cents per kwh starting from July 1, up 4.7 percent on average.