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Beijing denies

inflating resource prices

China has dismissed suggestions that its growing appetite for energy is behind rising global prices, saying reliance on local reserves of coal and oil to fuel its economy has helped stabilise resource markets.

 

    Ma Kai, head of the National Development and Reform Commission, the chief economic planning agency, said such criticism was "unfair" and misrepresented China's use of resources.

    Mr Ma, whose agency is also responsible for energy, said 2005 per capita imports of oil by the US and Japan were about 20 times those of China, a ratio that he thought would have been replicated last year.

    Mainly through the use of coal, Mr Ma said, China could meet about 90 per cent of its own energy needs - 20 per cent higher than the OECD average and 30 per cent more than the US.

    "I find it difficult to understand that people are not accusing these countries with their high levels of consumption and imports rather than accusing China," he said.

    "China has been a positive force in safeguarding global energy markets."

    Although China remains a relatively small per capita energy consumer, a result of the relative poverty of its 1.3 billion people, its real effect on global markets has been its increasing share of raw materials consumption in recent years.

    In 2005, China consumed 31 per cent of the world's steel and, as a result, 41 per cent of iron ore, 35 per cent of coal and 23 per cent of refined copper.

    China's energy consumption is highly inefficient, a fact acknowledged by the Government, which has set ambitious targets to reduce the amount of resources used per unit of economic output.

    Chinese steel makers use about twice the energy needed by their US competitors to produce a tonne of steel, while other Chinese enterprises use up to eight times as much water for other industrial processes.

    Since 2002, global commodities prices have risen in tandem with four consecutive years of double-digit economic growth in China.

    There is no sign of any substantial slowdown in sight.

    Mr Ma said that last year's 10.7 per cent annual GDP expansion was "normal" given the country's stage of development and reflected the increasing ability of the Government to sustain high-speed, level growth.

    "There were no big ups or downs, meaning the stability of the economy improved," he said.

    Premier Wen Jiabao said in his annual report to the National People's Congress this week that the Government had set a growth target for this year of 8 per cent.

    But Mr Ma said on Wednesday that the figure had been set at that level to send a message to local governments not to "blindly" seek growth. A number of Chinese iron ore importers had agreed to jointly suspend orders from India after the country started imposing an export tax of 300 rupees ($8.70) a tonne last week, the Dow Jones news agency reported on Wednesday.

    Indian exporters, reluctant to see their profits eroded, have asked Chinese buyers to pay the tax, according to local traders.

    India accounts for about one-fifth of China's total iron ore imports and is the country's third largest iron ore supplier.

    Last year, China imported 74.78 million tonnes of iron ore from India.

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