China hike gas price, a political play?

China anounced 18% gas price as well as electricity increase on last Friday. An article on Reuters stated that this is a political play to achieve one-stone-three-birds strike. First, it can curb gas consumption and oil price soar. Second, it projected the Chinese government's image of concerning international pressure on efforts to reduce oil demands. Third, it is selected at a timing that surprised international community so the autonomous is evident, especially under Western countries' pressure that China should remove oil subsidiary. But remember there is a high level involvement in next week's oil convention in Saudi Arab. Regardless of what actual consideration is, the act is widely welcome and had an immediate dent on oil price, a $5 drop.

At the same time, Chinese authority assures there is no significant impact on domestic price. This is very doubtful when CPI reached 7.8% level. The red hot economy has indefinite connection to oil consumption. An 18% hike doesn't have much impact on CPI? Come on... There are other subsidiaries on the way. So this politics play well domestically and internationally.

So what if oil price shrug off the play and keep rising? It looks like the case because there is no actual changes except OPEC would commit more production. Soften dollar keeps RMB rising too.