China oil price hike is good for the economy

China decided to hike the oil price last week, finally. It was a good move.

Usually, when the fuel price increases, the inflation would follow. Because the logistic cost would go up and that's not good for the general economy. But this time round, the situation is a bit different.

The current oil price is driven by speculative interest, geo political uncertainties and strong demand. If the government does not do something, the oil price might just keep increasing and hurt the world economy. After adjusting for the oil price, there would be a short term inflation spike, but it should help to curb the oil price increase in long run. Hopefully, the price would return to sanity soon.

In the short term, continuous financial market volatility seems to be the best bet.