Empirical Analysis And Measures On Imported Inflation In China

It is argued that increasing globalization and openness to trade could exert upward pressure on inflation in one country by the transmission of rising imported commodity prices. Since China become to be a member of WTO in 2001, the overall price level has a slight relation to the inflation pressure from the rest of the world. Especially, with the deeper implement of China’s open policy, inflation in China is more easily affected by imported factors. Gradually, the subject that imported inflation should be paid more attention has become a consensus.The thesis proceeds as follows. First, it puts forward the implication and channel to spread of imported inflation, and combines the causes of imported inflation which differences at home and abroad. Second, the thesis use empirical work to elaborate the extent of imported inflation of last 12 years through impose response function and variance decomposition analysis of SVAR. model. The analysis indicates that inner factors play an important role in inflation; imported factors take a proportion of 17%. Nowadays, the author thinks that the impact of imported inflation may be exaggerated. Finally some possible implications for police makers are briefly considered. As the current domestic economic condition illustrates, the effective countermeasures should be the followings:setting the long-and-medium strategies of the energy sources utilization; improving the domestic futures market; encouraging the enterprises to step outside; coordinating the order and extent of financial reform; establishing risk management framework of short-run capital inflow, and so on.How to prevent or solve the imported inflation trend will be a challenge regarding a worrying that the imported inflation may be worse when we promoting economic transition, capital market and urbanization. So the study has important practical significance over the long run.