China will increase crude oil imports this year, but the import of oil products will still be banned, China Daily reported on Monday. The move is based on an oil shortage in the domestic market and the country's refining capacity surplus, said sources with the State Administration of Petroleum and Chemical Industries (SAPCI).

Although China is now the world's fifth largest oil producer, it must turn to oil imports to meet the mounting domestic demand.

To fuel the country's economic growth this year, which is anticipated to strike 7 percent or higher, the domestic oil demand will rise at least 4 percent, sources said.

The imported oil will move a bit higher than that of last year to more than 40 million tons, said Chen Yongwu, an SAPCI official.

China imported 38 million tons of crude oil in 1999. And the imported oil will come from the Middle East and Southeast Asia.

"China is also attempting to pump more crude oil at home to alleviate the oil supply shortage," the official said. But he still predicted an enlarging gap between oil demand and domestic output.

China's oil demand is likely to approach 300 million tons in 10years with its rapid economic growth, insiders said, noting that China will continue to be a net oil importer, a situation that has been lingering for more than six years.

"However, we can fully guarantee that there will be enough oil products on the domestic market this year, making import unnecessary," Chen stressed.

China has used only 66 percent of its oil refining capacity, enough to meet the domestic demand for oil products, which expects to be 101 million tons this year.

China's current refining capacity amounts to 260 million tons, ranking the fourth in the world. And there are still large quantities of oil products in short supply nationwide.

The government is encouraging domestic refineries to process imported crude oil, the official said, adding that the ban on oil product imports, which was implemented about one and a half years ago, is expected to help the refineries earn more profits this year as oil product prices remain stable.