.20 1980s, China's Inflation Theory

Nowadays we have witnessed relatively high pressure on commodity price. The development of CPI has attracted a variety of notice from both academic and pratical fields. Some of the scholars try to seek the homogeneous factors between the former inflation and the present situation, but the results couldn't reflect the basic reasons of the inflation occurrence. Till now, no agreement has come to about whether the present raise of CPI is an actual inflation phase or only a structual price raise of some commodities. Inflation will do a great many harms to the entire economy if the administrative authorities fail to handle the confusional condition. Taking the former inflation happened in last 80s as the research object, this paper gives qualitative analysis of the current price raise according to the research results brought about by the author, summarizes the reasons of the nowaday CPI situation and makes suggestions to the authorities.On the base of summary in details about the development of our inflation in last 80s, this paper criticizes for the conclusion the academic fields has summed up about the inflation reasons. The paper deems that the gross demand increase including fixed asset investment volume, consumptive fund and fiscal deficit is not the fundamental reason of the inflation on ground of just quantitative analysis. Moreover, redundant money supply is neither the ultimate reason of the inflation for the volume of monetary liquidity is based on the money demand of the entire economy. However, as the paper has previous said, the gross demand doesn't exceed the critical scale so that the gross money supply can not cause the CPI to desend to such extent.By means of the AD-AS Model, this paper tries to analyse the inflation reason with a new angle of notion using price as the relation media. To the point of view, the long-term tortuous price system can not reflect the contradiction between demand and supply, vis-a-vis, the imbalance of demand and supply can not explain the actual price change so that we no longer use the traditional method find out the reason that hiding under the truth. This paper find a new way that to explain how the changeable price affect the balance of demand and supply and the imbalance gives an impact on further price alteration to excavate the genuine reason. Finally, the paper generalizes the conclusion that the revolution of price system and retortion of the rate of exchange are the rooting cause the 80s' inflation. Futhermore, the irrational raise of the price in circulating field does harm to the price forming order. Firing into the wrong flock of the price revolution stimulates the inflation to more serious extent. To sum up, the innovative points of this paper involve: (1) to specify the development of the past inflation in great detail in order to better explain how the inflation happen, which is the point of absence of former research. (2) to look for the basic cause of the inflation by a new angle of view, which is entirely different from the former research, and to legibly analyse and rebut the former standpoints. (3) to give a general overview of current situation of price raise by use of the conclusion the paper has jointed and table some proposals to the settlement of the inflation.