Q+A-Is China's oil demand immune to price rises?

Feb 21 (Reuters) - China raised gasoline, diesel and jet fuel prices on Sunday for the first time in 2011.
Simple economics dictate that demand should fall as prices rise. But in China, the situation is more complicated. Here's a look at the relationship between prices and oil demand in China.
WILL THE LATEST FUEL PRICE RISE CRIMP DEMAND?
No. In fact, the fuel price rise aims to help meet demand. Without the rise, high crude oil prices would weigh on Chinese refining margins, incentivising refiners to produce less fuel. That could lead to shortages, forcing China to import fuel to bridge the gap. So higher prices should ensure supplies.

"The point where the global oil price leads to a decline in oil demand in China still seems far away to me," said Barclays Capital analyst Yingxi Yu in Singapore.

HOW HIGH ARE PRICES NOW?
China's gasoline and diesel prices are higher than ever and Chinese motorists pay much more than U.S. drivers. In Beijing, the price of 93 octane gasoline rose 0.28 yuan to 7.45 yuan per litre ($4.28 per gallon).
In 2010, China's gasoline prices rose 8 percent and diesel 9 percent, while benchmark U.S. crude rose about 11 percent.
For a factbox on state-regulated fuel prices in Asia, click
Wang Ao Chao, head of research at UOB in Shanghai, said rising commodity prices had prepared many for oil to catch up.
"Up to $110, it will not arouse worries about further inflation. But if it goes above $120, it could be very negative."
Analysts at Merrill Lynch say before the oil price reaches that level, it would hit more vulnerable economies such as South Korea, Turkey, Greece, Ireland and South Africa.
"If oil instead broke unexpectedly to a $120-130 a barrel range, pretty much every other net energy importer, including Germany, Japan, China and other parts of Asia, would be hurt."