The Study On Impact Mechanism And Effect Of U.S. Quantitative Easing To China’s Inflation

Since 2009 China has experienced a new round of inflation, PPI, CPI and other price index rose sharply. At the same time, the United States implement four round of quantitative easing monetary policy to deal with the financial crisis and get rid of the economic depression. However the QE has an important impact to other country’s economic development and prices. The international transmission mechanism of monetary policy has always been the focus among the economists, particularly about the international monetary policy influence of the United States.Many experts and scholars agree that the quantitative easing monetary policy of the United States has a big impact to China, and it is the main cause of this round of inflation in China.Based on related theory and literature of QE and international transmission mechanism of monetary policy, this paper will use the method of theory integrating with practice and the method of qualitative integrating with quantitative and the method of comparative analysis to have a comprehensive research and discuss the problem "The research of U.S. quantitative easing monetary policy has an impact effect to the inflation of China ".First, On the basis of theoretical and empirical research literature about the impact of the international monetary policy transmission mechanism, this paper will discuss the transmission mechanism of the US. QE to the inflation of China from three levels:the level of macroscopic equilibrium, the level of capital flows and the level of inflation, and get an integrated framework of transmission mechanism. Secondly, This paper Analyze the reality of the US. QE and its impact to the inflation of China. Then, This paper select many relevant variables indicators to take empirical research on the basis of the theory frame of transmission mechanism. It is concluded that the quantitative easing monetary policy have a larger impact on China’s inflation, and its impact gradually weakened over time. This article is on the background that U.S. inflation transmit to China through international economic communication under economic and financial globalization, and from multiple perspectives analysis the strategies of how to deal with U.S. Quantitative Easing and policy recommendation of how to manage this type of inflation with theoretical and empirical method.