Highlights from the last week of China business news.
The petroleum pinch
The price of crude oil is at a historic high, and China is feeling the pain. Beijing raised gasoline and diesel prices today by almost 10% as crude oil nearly hit US$100 a barrel, despite guarantees that it wouldn’t raise prices at all this year to help keep inflation low. Looks like you can forget about that for now. Price pressure has forced small refiners to stop operations and created fuel shortages around the country. Even state-run oil and gas behemoth Sinopec was grumbling. China complained about the ridiculous state of oil prices at the OPEC energy roundtable last week, but to no avail, it seems. It’s not just oil that’s in short supply. Iron ore prices are projected to increase by up to 50% next year, thanks to China’s appetite for steel. Mining companies like Australia’s BHP Billiton are eager to cash in on this; it’s proposed a new pricing system that will make the commodity much more expensive for Chinese steelmakers. The commodity crunch is not all bad, though: It could generate demand for things like hybrid and clean-fuel cars, like the ones GM is starting to develop for the Chinese market.
The Asian space race heats up
A new space race has begun in earnest. As we mentioned last week, China and Japan now have probes orbiting the moon, following China’s successful launch of its module last week. Days later, it announced that it plans to build a new launch base on Hainan island, better known as China’s tropical getaway. The ambitious plan for the base includes relocating 6,000 people – a trifling number next to the multitudes displaced by other large-scale national prestige projects in China. It’s scheduled for completion in about five years. Why the haste to build a new base? It’s because China wants the optimal low-latitude location for its new series of Long March 5 rockets. Rockets launched from lower latitudes can carry larger loads, which incidentally is exactly what the new rockets will be designed to do. They’ll carry heavier loads of communications satellites and lunar probes, and will be launched from the new Hainan base. India is scheduled to join the fun next April, when it is slated to launch its own lunar probe. Last country with a man on the moon is a rotten egg!
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