Chinese experts suggest that China should take all-sided measures to combat the negative influence of soaring oil price on China's economy, according to People's Daily.

Feng Fei, director of the Research Department of Industrial Economy under the State Council Development Research Center, cited operation of hedge funds as one of the major reasons pushing the oil price to record high.

"If the international oil price increased by 10 US dollars, 70 percent could be attributed to speculative factors such as the operation of hedge funds," Feng said.

The continuing depreciation of US dollars is another cause for soaring oil price, he added.

In 2004 alone, the US dollar saw its value depreciated by 30 percent. In this sense, the real oil price should be 30 percent lower than the current level, he said.

As current world oil production and supply remain normal, it is too early to say that another oil crisis is coming, he said.

However, the soaring oil price do poses a threat to the security of petroleum supply, which has been placed on the agenda of almost all governments around the world.

Therefore, China, a country whose oil demand kept growing in recent years, should take all-sided measures to combat the soaring oil price, Feng said.

In drawing up the oil policy, China should take petroleum supply security into consideration. As a petroleum net importer, China saw its dependency on overseas oil market to 40 percent in 2004, which is expected to be much higher in the next 10 to 15 years.

Feng suggests that China should reform its petroleum pricing system, which cannot reflect the real domestic supply and demand and always lags behind the fluctuation of international oil price.

Such a pricing system results in little risks of speculation in petroleum purchase, and domestic petroleum corporations import more oil when the price is high and import less when it becomes cheaper, said Feng.

China should also reform its petroleum circulation system and trading mechanism by boosting petroleum futures trading.

Developing new energy resources is one of the fundamental ways to cope with oil price fluctuation and ensure energy supply security.

China should issue more policies to encourage the development of renewable energy resources and establish a multi-energy consumption structure, he said.