A Study On The Relativity Between Liquidity Surplus And Inflation In China

Since China join into The World Trade Organization(WTO), its foreign economic and trade get fast development, the scale of foreign exchange reserve rise sharply, the circulation of base money continuous increase. After the financial crisis, although liquidity emerge shortage in short time, it shift significant excess liquidity again with the implementation of rescue policy around the world. The characteristics of Chinese economic development make its liquidity is not only affected by external economic environment, but also related to its balance of payment and economic structure closely.Excess liquidity not only stimulate the depressed economic, bring enough capital for the economic recovery, but also lead to the pressure of inflation.The article analyze the performance and cause in economic development of excess liquidity combined with data and graph, it based on the liquidity on macro level,it prove that it has correlation between excess liquidity and inflation through the combination of theoretical and empirical research method. At last, combining the reality of our country, the article put forward the suggestions of control excess liquidity in order to achieve the effect of relief inflation from three aspects, it concludes controlling the inflow of liquidity, the reasonable allocation of domestic liquidity and increase the output of liquidity.