PROSPECTS for consumer relief from sharply rising oil prices improved yesterday as new data suggested that the sharp rise in China's demand for oil, was at last tapering off.

Figures released by the International Energy Agency (IEA) yesterday showed that growth in Chinese demand slowed in the first two months of 2005 to 5.4 per cent, down from 20.8 per cent in 2004.

The news will come as relief to the Beijing government, which has been under increasing international pressure over the link between its breakneck growth rate and the rise in global oil prices, as high as a record US dollars 58.28 last month.

As well as steps to increase poor energy efficiency, China has been promoting supply diversification through projects like the Three Gorges dam and has been considering imposing Western-style tax hikes, which would increase retail prices by 20-50 per cent.

But such a move would risk hampering growth in key sectors and might spark unrest among the country's hundreds of millions of farmers.

China's oil demand has doubled over the past ten years, while its own oil production has increased far more slowly. Oil consumption jumped by a spectacular 15 per cent in 2004 alone.

"The trend in Chinese demand for oil remains upwards, " said Dr Linda Yueh, of the London School of Economics.

"This slowdown reflects a normalisation after the spectacular boom caused by last year's credit liberalisation.

"China's decision last spring to raise interest rates to curtail lending was largely because of the effect of the construction boom on demand for oil."

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