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Tianjin, China (pte040/27.06.2005/16:29) - At the sixth Asia-Europe Finance Ministers http://asem.inter.net.th/ meeting in Tianjin, China, European Commissioner for Economic and Financial Affairs, Joaquin Almunia said that the reason for the recent hike in oil prices was China's growing need for the commodity.
Oil prices exceeded the US$60 mark today, Monday, and is trading at record highs. Experts say that now the $60 mark has been breached, prices could soar even higher.
"Even if they will be maintained at the present level of around $60 per barrel, of course they will have a negative impact on our growth rates," Almunia said.
Prices were unlikely to fall in the near future, the commissioner maintains, especially because China is claiming a growing share of the limited resource. "It is clear that (it is) the Chinese demand for oil which can explain the situation of the market," he said.
In addition, Almunia fears high global oil prices could potentially inflate wages and prices and further slow growth in Europe.
China sites low per capita usage rates compared to developed nations, playing down its role in the price rise. However the fact remains that China's economy grew by 9.5 per cent last year - and the country has low oil resources.
Issues to be discussed during the meeting, which is attended by representatives from the World Bank, the International Monetary Fund and the Asian Development Bank, will include proposed solutions for more efficient use and finding other energy sources as well as improved communication and transparency in the supply system worldwide.
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