Facing sharply rising energy prices, China on Monday took steps to defray costs for its more than 300 million drivers who depend on gas-powered cars.
The country’s top economic planning agency, the National Development and Reform Commission, announced that it would “reduce the burden” on drivers by lowering a planned increase in gasoline.
Starting on Tuesday, the price at the pump will be set at an average of $4.70 a gallon — up from $4.20 but much lower than a planned $5.10 a gallon. Even with the lower cap, gasoline has jumped about 20 percent since the start of the war in Iran.
The agency adjusts the price of gas every 10 days to reflect changes to the global price of oil. The surge in energy costs caused by the war has made this typically formulaic process more economically and politically fraught.
The decision to change its gas pricing was unexpected by oil analysts who watch China closely.
“It suggests that Beijing is deeply concerned about inflationary pressure and consumer affordability, especially given the ongoing macroeconomic headwinds,” said Muyu Xu, a senior oil analyst at Kpler, an industry data firm.
The 40-cent increase was the largest single rise to the retail price of gas since the planning commission started adjusting prices every 10 days in 2013. Ms. Xu said she believed it was the first time the commission made such an intervention.
China has made concerted efforts to reduce its dependency on oil. Electric vehicles or hybrids, which run on both electricity and gas, make up half of new car sales and around 12 percent of all cars in China.
But there are still around 300 million cars that run only on gas in China. A little more than half of the country’s seaborne crude comes from the Middle East, and a quarter of that from Iran.
Gig workers, many of whom use their cars to ferry people around, are expected to be some of the drivers most effected by rising gas prices. Drivers for companies like Didi Chuxing, the ride hailing giant, and JD.com, the logistics company, will come under financial pressure unless the platforms increase delivery fees or implement fuel surcharges to pass on the additional costs to customers.
Also feeling the sting of higher gas prices are truck drivers who rely on older vehicles with internal combustion engines. On Chinese social media, hundreds of truck drivers said they had stopped working or planned to stop working because they could not shoulder the burden of the price increase.
For many consumers, the rising price of oil is another blow to confidence. China is still contending with a yearslong property crisis that has affected many households that invested their savings in apartments. Young people are still struggling to find jobs.
A protracted conflict in the Middle East could not only drag down consumer sentiment, which has recently shown some signs of improving, but also threaten an important market for Chinese exports and investment.
Over the weekend in cities across China, drivers started heading to gas stations after Chinese state media warned that higher prices were coming.
One of them was Shu Gang, 55, who works in the insurance industry in the northeastern city of Qingdao. On Sunday night, he waited in line at a gas station for around 10 minutes before getting fuel, he said. He doesn’t drive very much and usually has to fill up his tank only twice a month, so he’s not too worried.
“Prices have indeed gone up a lot,” Mr. Shu said.
Li Peng, a Didi driver who uses a Toyota Levin he rents from his company, said he planned to rush to get gas after work on Monday. He estimated that his daily fuel expenses would jump to $14.52 (100 renminbi, China’s currency) from $11.62 (80 renminbi) starting on Tuesday. Mr. Li, who refuels every two days, said he already encountered long lines as drivers scrambled to fill up.
To offset the higher gas costs, Mr. Li said he expected to spend more hours driving. While he views the increase as “relatively large,” Mr. Li said he believed the burden would not fall solely on drivers. He anticipated that if fuel costs climbed too high, Didi would eventually be forced to raise passenger fares.
Li You contributed research from Shanghai.
Alexandra Stevenson is the Shanghai bureau chief for The Times, reporting on China’s economy and society.
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