By Xuan Xiaowei　

Date: 2004/11/10

Abstract:

China is now the second largest oil consumer in the world and the arch nation in terms of oil consumption growth . Changes in China’s demand on oil exert strong impact on international oil market. China is facing a dilemma in oil importing business: the more it buys the higher is the price, and that the higher the price the more it demands, due to a number of internal problems such as great variation in importing quantities, opaque price information, and flawed pricing mechanism in domestic market. Given the fact that China is bearing huge price cost unnecessarily in terms of oil import, it should publicize its oil market information in time to encourage domestic oil companies to participate in the hedging business in the futures market, and improve the pricing mechanism in domestic market.