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Strong RMB to have mixed effect on oil
By Wang Ying (China Daily)
Updated: 2005-07-27 06:26

Both are in focus; but neither is isolated.

A recent appreciation of the Chinese yuan will have mixed effects upon China's oil industry, but the impact is limited as the change remains only a moderate 2 per cent, said economists and industry experts.

Workers with China Petrochemical Corporation, or Sinopec, China's largest petroleum and petrochemical firm, install oil exploring equipments to be used in overseas oil fields. [CD]
The petroleum industry has been vociferous over its concerns for the stability of the Chinese economy. The stronger yuan will first show its effect on oil imports, said industry analysts, as the country relies on foreign sources for 40 per cent of its oil needs.

"The strengthened yuan will be a positive move for China's oil imports, because the increased renminbi exchange rate means reduced costs for China when buying crude oil on the US-dollar-denominated world market," Deng Yusong, vice-division-chief of the Research Institute of Market Economy under the Development Research Centre (DRC) of the State Council, told China Daily in a telephone interview.

Drastic oil import increase unlikely

Even so, the stronger yuan is unlikely to cause an obvious increase to the volume of oil imports for the world's second largest energy consumer after the United States, as the rise in the renminbi exchange rate is only a "mild step," Deng said.
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