China: Fuel price hike effect should be controlled

China announced a hike in fuel and electricity prices last week in an effort to stem demand and increase power supplies in the domestic market. To blunt the impact of the move on consumers, the country's top economic planner has told local governments to control the possible chain reaction caused by the fuel and electricity price hike.

According to the latest notice issued by the National Development and Reform Commission, local governments should guarantee that prices of liquefied gas, natural gas and electricity for households, agricultural use, and fertilizer production are not affected. Prices for transportation closely linked to people's daily lives -- like passenger rails and city buses -- should not rise. And taxi rates should not be adjusted for now. The government should offer subsidies to taxi drivers.

The notice is also requiring subsidies to sectors most hit by the price hikes, including fishery, forestry and public transportation. It stresses that price hikes of downstream products should be limited. And local governments should urge producers to lower costs to diminish the effect of the price hikes.

In addition, it orders crackdowns on any speculators seeking to profit by excessively raising prices. The government should also be active in preventing price rises of disaster relief materials.