Lower medicine prices are the top priority of China’s health authorities this year, the Health Ministry announced Monday.

A national essential medicine system would cover most government-sponsored grass-roots health institutions where drugs would be sold with zero mark-up by the end of the year, said ministry spokesman Deng Haihua at a regular press conference.

China began implementing the essential medicine system in 2009 in a bid to reduce costs for patients.

Due to longstanding low government funding for State-run hospitals, which in many places only covers 10 percent of operating costs, doctors have often aggressively prescribed expensive, and sometimes unnecessary, medicines and treatment in order to generate income for the hospitals.

The implementation of the essential medicines system has reduced the prices of certain prescription drugs.

Deng said the ministry would focus on streamlining the centralized procurement and distribution of essential medicines and making sure they were sold at no more than cost price.

Centralized procurement of drugs at government-run institutions was introduced to bring down drug prices from the supply end and to lower prices of medicines for patients.

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PetroChina Company Limited, China’s largest oil producer, announced on Monday that its subsidiary has entered into a framework agreement with subsidiaries of INEOS Group Holdings plc for a new trading and refining joint venture in Europe.

The agreement was signed between PetroChina International Company Limited, a wholly-owned subsidiary of PetroChina, and INEOS European Holdings Limited and INEOS Investments International Limited, each a wholly-owned subsidiary of INEOS.

The framework agreement sets out the main principles in which the parties will work towards forming joint ventures related to trading and refining activities at the Grangemouth refinery in Scotland and the Lavera refinery in France.

All companies will work towards the formation of the proposed joint ventures by the end of June 2011, according to PetroChina in a statement released on Monday.

PetroChina’s parent company, China National Petroleum Corporation (CNPC) and INEOS, also signed a strategic cooperation agreement on Monday to share refining and petrochemical technologies and expertise between their respective businesses.

If the deals are completed, they will be of great importance for PetroChina’s global allocation of resources and market portfolio, exploring the high-end European market, as well as establishing PetroChina’s European oil and gas operation center, said PetroChina.

According to the statement, both sides will improve the long-term sustainability of the INEOS refineries, enhance security of supply for customers and secure jobs and skills in both the UK and France.

After the completion, both sites will remain integrated into INEOS’s downstream petrochemical production, said PetroChina officials.

The Grangemouth refinery is located on the Firth of Forth with direct access to crude oil and gas from the North Sea. The Grangemouth refinery processes some 210,000 barrels of crude oil per day and provides fuel to Scotland, Northern England and Northern Ireland.

Further, the Lavera refinery processes 210,000 barrels of crude oil per day. It is located on the coast of the Mediterranean crude oil trading basin, next to the port of Marseille and adjacent to a crude oil terminal. The refinery supplies fuel by pipelines into France, Switzerland and Southern Germany.

Both sites are integrated into INEOS’s downstream petrochemical production and remain strategic to its long-term business.

Subsequent to the signing of the framework agreement which defines the principles under which PetroChina International and INEOS will work towards forming the joint ventures related to refining and trading, there will be a period of consultation prior to signing a binding agreement subject to the approval of related regulatory bodies, according to PetroChina.

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China’s automobile market registered the highest annual sales in the history of the global automobile industry in 2010, far surpassing those of the United States for a second consecutive year.

That came as successful stimulus measures from local governments, and a strong economy, boosted the nation’s vehicle sales by more than 30 percent.

Domestic auto sales jumped 32.37 percent to 18.06 million vehicles in 2010, said the China Association of Automobile Manufacturers on Monday. The figure far outstripped the expected 11.5 million units of sales in the US last year.

Moreover, the nation sold 13.76 million passenger vehicles, including cars, sports-utility vehicles (SUVs), multi-purpose vehicles (MPVs) and minivans in 2010, surging 33.2 percent year-on-year, said the association.

China’s December auto sales hit a monthly record high of 1.3 million units in 2010, as buyers flocked to catch the last opportunity for tax incentives for small cars and subsidies for trade-ins, as well to take advantage of Beijing’s quota policy on car purchases.

“The change in policies makes us lower our anticipation for this year’s automobile market from the previous 10 to 15 percent year-on-year growth to no more than 8 percent,” said Cui Dongshu, vice-secretary-general of the National Passenger Car Information Exchange Association. “And the serious excessive consumption in 2010 even may lead to zero or negative growth this year.”

The association’s Secretary-General Rao Da said he believes that in 2011 China will probably record the first negative year-on-year auto sales growth for 20 years.

“However, short-term negative growth is good for the industry restructuring and mergers which the government is calling for. Meanwhile, the fierce competition will help improve the quality and technology of the vehicles, as well as the management and operation of the automakers,” said Rao. “It should be a good opportunity for China to strengthen the automobile industry.”

According to Rao, the withdrawal of the tax and subsidy policies will have a heavy impact on the sales of small cars, with an engine capacity of 1.6 liters or lower. That category accounted for 60 percent of last year’s passenger car market.

“The luxury car, SUV and MPV segments will grow faster than the total industry as people’s requirements for cars change, and they look for more functional transportation tools,” said Rao.

Analysts expect that the domestic automobile market will grow at 10 to 15 percent annually on average during the next five to 10 years, saying that’s a reasonable rate for healthy development.

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