China's oil hunger hurts growth: official

China's for oil is contributing to the high oil prices that threaten Europe's economic growth, European Commissioner for Economic and Financial Affairs Joaquin Almunia said yesterday.

Almunia world oil prices, which closed Friday just short of the US$60 mark, were the most pressing issue facing delegates to a meeting of Asian and European finance ministers in the northern city of Tianjin.

"Even if they will be maintained at the present level of around US$60 per barrel, of course they will have a negative impact on our growth rates," he said on the sidelines of the meeting.

Almunia prices were unlikely to fall in the near future, especially as China claims 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.

China plays down its impact on the price of the commodity, pointing to low per capita usage rates compared to developed nations.

But its booming economy, which grew by 9.5 percent last year, is low on fuel and there are managed shutdowns of industries during peak periods.

The country plans to build up its strategic reserves of oil as a buffer against such shortfalls.

Almunia it was every nation's right and responsibility to develop such reserves but noted "it is one of the factors that can explain the increase in the demand in China."

He said he feared high global oil prices could have flow-on effects, potentially inflating wages and prices and further slowing growth in Europe.

A call for more stable oil prices is expected to feature in the final communique of the finance ministers' meeting, which closes yesterday.

In the morning opening session, China's Premier Wen Jiabao (溫家寶) said Asia and Europe should work together to "curb big fluctuations in oil prices."

But Almunia declined to say whether China's role in managing its demand for the commodity had come up for discussion.

Other said over the weekend that the meeting would consider the need for more efficient use and a wider range of energy sources as well as improved communication and transparency in the global supply system.