Has Petroleum Pricing Reform in China Achieved Its Objective? An Empirical Study

Boqiang Lin () and Qingying Zheng

Emerging Markets Finance and Trade, 2016, vol. 52, issue 12, 2837-2845

Abstract: China’s petroleum pricing reform has started since 1998 and is still ongoing. It has a profound impact on China’s oil market and even global oil market. We quantitatively evaluate the effectiveness of the reform on two key issues. Has the pricing reform strengthened the linkage between the international crude market and China’s petroleum products market? Has the pricing reform magnified shocks to the international crude market on China’s economy? Our results show that the reform has strengthened the relationship between China’s petroleum prices and international crude price without negative influence on China’s economy, but the effect of China’s petroleum prices on international crude price is still limited. Furthermore, the reform helps the Chinese government reduce oil subsidies.

Date: 2016
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DOI: 10.1080/1540496X.2016.1224710

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