China News Summary
Proactive Wednesday China News Summary
Beijing talks energy
China's no central heating below the Yantze policy forces Shanghai to sit out the biting winters beneath air conditioning units on reverse, but a few words from the capital on energy policy set Shanghai's stock market alight today - closing 6.05 percent up on the back of a hinted fuel tax after falling by 6.2 percent yesterday.
Han Wenke, director-general of the Energy Research Institute of the National Development and Reform Commission, was quoted in the English-language government mouth-piece, the China Daily, as saying: "The government has repeatedly said that it is looking for an appropriate time to start levying fuel tax, and now, with the global oil prices going down so much over the past few months, I think this is a great time to impose the tax."
Refiners up
Such a tax would lead to higher gasoline prices and improve the companies' refining margins.
Sinopec, China's largest refiner, jumped by 10 percent (the daily limit) to 8.37 yuan in Shanghai and 2.8 percent in Hong Kong to 0.12.
PetroChina gained 7.49 percent in Shanghai and 0.9 percent in Hong Kong.
Auto stocks unfazed
Some voiced concerns that the auto industry will suffer if the fuel tax is imposed, but Guangzhou Automobile Industry Corp., China's sixth-biggest carmaker, has called for fuel taxes to be introduced to relieve traffic. It closed 3.6 percent up in Shanghai. Fuel-efficient car makers will also take advantage of fuel tax, such as Tianjin FAW Xiali Automobiles (SZ:000927) which shot up 9.9 percent on the Shenzhen bourse.
Less coal, more nuclear
Page three of today's China Daily also announced the planned closure of 6,000 unsafe coal mines over the next two years, in what is being seen as the first steps of a major consolidation of the coal industry. It comes after 200 billion yuan of energy projects were approved last week, including: the eastern section of the second west-east gas pipeline between Zhongwei in Ningxia Hui Autonomous Region to Guangzhou and Hong Kong and 10 nuclear power reactors with a capacity of 1,000 megawatts each in the provinces of Fujian, Zhejiang and Guangdong.
And more gas
Also prominent in today's full-thrills China Daily, was the announcement of the construction of an oil and gas pipeline linking Myanmar and China's Yunnan province due to start next year. The project includes a US$1.5bn oil pipeline and $1.04bn gas line and is expected to provide an alternative route for China's crude imports from the Middle East and Africa and ease the country's worries of its over-dependence on energy transportation through the Strait of Malacca.
China National Petroleum Corp (CNPC) will hold a 50.9 percent stake and manage the project. Its shares closed 2.8 percent down in Hong Kong today.
The Russians are coming, hopefully
Another long-awaited pipeline may start bringing gas to China through Siberia in 2009. Russia energy minister announced yesterday that the postponed talks, in which China would provide loans to Russian oil companies, will resume next week.
An agreement should be reached before the 25th of November according to the MoU signed between Premier Wen and President Putin on October 28th. The talks were suspended a week ago due to differences on lending rate and loan guarantee.
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