By Chen Jing, Vision Times
On March 23, China once again adjusted domestic fuel prices, marking yet another steep increase for drivers and consumers across the country.
According to a notice issued by China’s National Development and Reform Commission (NDRC), the government raised domestic gasoline and diesel prices starting at midnight on March 23. Officials cited rising global crude oil prices, driven in part by escalating tensions caused by the war in the Middle East, as the main reason for the adjustment.
RELATED: China Raises Fuel Prices as Global Oil Surge Triggers Long Lines at Gas Stations
Government introduces ‘temporary controls’
Under China’s current pricing mechanism, analysts estimate that gasoline and diesel prices should have risen even more sharply during this round of adjustments. Based on international oil prices, gasoline would have increased by 2,205 yuan per ton and diesel by 2,120 yuan per ton. However, the NDRC said it implemented a temporary regulatory measure to limit the impact on consumers.
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The agency reduced the final adjustment to 1,160 yuan per ton for gasoline and 1,115 yuan per ton for diesel, marking the first time since the pricing system was introduced in 2013 that such temporary controls were applied.
But even with these measures, fuel prices still climbed to new highs in several regions. In Shanghai, for example, the price of 92-octane gasoline rose to 8.53 yuan per liter. In Hainan Province, where additional highway maintenance fees are included in retail fuel prices, the same grade of gasoline reached 9.68 yuan per liter.
Officials said the increase was largely driven by surging global oil prices, noting that Brent crude briefly exceeded $113 per barrel.
A hefty increase
The rapid increase marks a stark contrast to conditions just a year earlier. Around the same time last year, 92-octane gasoline averaged about 6.8 yuan per liter, meaning a full tank of fuel cost roughly 340 yuan. Since then, prices have climbed significantly, placing additional pressure on households already facing a slowing economy.
The last time fuel prices rose this sharply was in 2022, following Russia’s invasion of Ukraine and the resulting shock to global energy markets. This time, however, the surge is occurring without a comparable worldwide supply crisis, prompting debate among Chinese consumers about the causes and consequences of the price increases.
When compared with other economies, China’s fuel prices appear relatively high given the country’s income levels. Based on approximate conversions to yuan, the price of gasoline comparable to China’s 92-octane grade currently averages:
- United States: about 7.16 yuan per liter
- Japan: about 8.26 yuan per liter
- Taiwan: about 6.6 yuan per liter
- China: roughly 8.53 to 9.68 yuan per liter, depending on the region
The comparison has fueled discussion online, particularly as Chinese incomes remain significantly lower than those in the United States and Japan.
Rising costs across the board
Economists note that higher fuel prices can quickly ripple across the broader economy. Oil is often described as the “lifeblood of modern industry,” meaning that rising energy costs typically increase transportation and logistics expenses. Once those costs rise, they often spread to other sectors, from agricultural products transported to cities, to consumer goods, delivery services, and manufacturing supply chains.
As a result, higher fuel prices can contribute to broader inflation by raising the cost of producing and distributing goods. For consumers already facing slower wage growth and uncertain economic conditions, the increase may further strain household budgets.
China’s economy has experienced mounting challenges in recent years, including slowing growth, declining property markets, and rising debt levels among local governments. In such an environment, analysts say rising energy costs could intensify pressure on both businesses and consumers.
If higher oil prices continue to feed into logistics, production, and retail costs, they could push up prices across a wide range of goods and services, contributing to inflationary pressures at a time when economic momentum remains fragile.
