The Spillover Effect Of U.S. Quantitative Easing Policy On China’s Monetary Policy

Since the outbreak of the financial crisis, The United States has taken a series of quantitative easing monetary policy to stimulate its economy. Owing to a globally economic downturn and a series of quantitative easing monetary policy, China has also taken moderately loose monetary policy. With the exit of American quantitative easing monetary policy, China’s monetary policy may be tightening. Under the relation of close economic development between China and the United States, It has the theoretical and practical significance to study the spillover effect of American quantitative easing monetary policy on China’s monetary policy.The article with expected effect studies that implementation and exit of U.S. QE may have an effect on China’s monetary policy from the aspects of theory. In addition, through the trade and capital channel, American QE may have an effect on China’s monetary policy. Then sets up a SVAR model by an empirical analysis of American industrial added value, American consumer price index, American broad money supply, China’s broad money supply, China’s net exports, and China’s short-term capital flows to set up SVAR model and studies the effect of American QE on China’s monetary through different transmission channel. The result shows that American QE has a little negative effect on China’s monetary policy through the channels of trade and capital channel. Finally, according to the research, we suggest that China should strengthen the management of expectations, change the mode of economic development, optimize the export structure, strengthen capital flow regulation, speed up the RMB exchange rate formation mechanism, and steadily push forward the financial reform to promote the international monetary system reform.