New Delhi. China has been facing an economic crisis for some time. The situation is so bad that it has to start selling oil from the strategic reserve for the first time. However, the Chinese government has said that this step has been taken to curb crude oil prices. On the contrary, experts say that it should be seen as an increase in economic challenges in China. In fact, recently China said that it wants to create an oil reserve of 85 million tonnes by the end of 2020, which is equivalent to America’s Strategic Petroleum Reserve. In such a situation, the world’s largest importer selling crude oil from its oil reserves is being seen as an economic crisis.
Steps taken to reduce inflationary pressure on companies
The State Bureau of China’s Grain and Materials Reserve said that for the first time, the State Council has approved the sale of crude oil from the National Reserve in a phased manner. The State Bureau said that the council has taken this step to reduce the pressure for the companies to increase the raw material prices. The sale of National Reserve Crude Oil through open bidding in the market will stabilize the supply and demand in the domestic market. Along with this, the guarantee of National Energy Security will be available.
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Crude oil prices recorded after China’s announcement
According to the Chinese government department, these sales will be made to refinery and petrochemical companies. After this announcement of the Chinese government, the price of crude oil in the domestic market has fallen by 1.6 percent. It has also affected the international market. Crude oil prices in the US fell by 1.7 percent. However, later there was some increase in it. China said in 2017 that it has created 9 major oil reserves in the country, of which 377 million tonnes of crude oil. Then China said that by the end of 2020, it wants to collect 80 million tonnes of oil in its reserves.
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China’s producer price index at 13-year high
According to experts, China’s economy is facing difficulties. The country’s producer price index had reached a 13-year high in August 2021. The biggest reason for this was said to be the increase in the price of petroleum. The demand for electricity is also increasing rapidly in the country. Due to this power supply has been disrupted in many provinces. A few days ago, the Chinese government had warned that if the price of petroleum and electricity continued to rise, it would have an impact on economic growth and employment. The government had said that this inflation is having a bad effect on small and medium businessmen.
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