The Impact Of US Monetary Policy On China’s Shanghai Stock Index

Since the reform and opening up,China’s economy has developed rapidly.At the same time as the establishment of the market economy,the securities market has gradually been established and developed.Among them,the most representative is the Shanghai Stock Exchange,which was established on December 19,1990.The important index of the changes in the price of listed stocks,the Shanghai Stock Exchange Index,is an important indicator for observing the state of China’s national economy.Since the outbreak of the financial crisis in 2008,the United States has begun to implement quantitative easing monetary policy,which has successfully pushed the economy out of the trough.In January 2014,the United States off-icially withdrew from the quantitative easing monetary policy and entered the interest rate hike cycle at the end of 2015.Whether during the period of quantitative easing in the United States or during the interest rate hike period,global financial asset price volatility is more frequent and more significant than ever.The United States is the world’s largest economy and an important trading partner of China.The changes in US monetary policy will inevitably have a big impact on the Chinese economy.The price of China’s financial assets has also undergone major changes during this period.In the stock market,the Shanghai Composite Index,an important reference index for the Chinese securities market,fluctuated significantly during this period.China is one of the world’s largest emerging economies,and it is essential to study the impact of changes in US monetary policy on the price of Chinese financial assets.The more important question is how the Central People’s Bank of China should analyze and formulate countermeasures under the impact of exchange rate effects and changes in US monetary policy.This not only needs to be highly concerned by Chinese academics and policy makers,but also requires effective analysis and formulation.Corresponding countermeasures.This paper first expounds the background and significance of the topic,summarizes the main content,research framework,research methods,and the innovation of this article.Then it makes a theoretical analysis of the impact of monetary policy on the price of financial assets.From the general content characteristics of monetary policy,it introduces the particularity and global characteristics of US monetary policy,and establishes the asset pricing model of the two countries under the open background.The transmission mechanism of monetary policy for foreign asset prices is explained.Then it analyzes the characteristics of the impact of US monetary policy on China’s Shanghai Stock Exchange Index,and describes the current situation of US monetary policy and China’s Shanghai Stock Exchange Index in the sample time interval,and then analyzes the impact mechanism of US monetary policy on China’s asset price,and finally through empirical research.Establish a VAR model and conduct Granger causality test,impulse response analysis and variance decomposition to illustrate whether the US monetary policy has an impact on the Chinese SSE price index,and to what extent it affects the results of the empirical analysis.Interpretation of the reasons and conclusions prove that the changes in US monetary policy have a significant impact on China’s Shanghai Composite Index.Based on the empirical results,this paper puts forward some suggestions from the reality of China:First,we must build and improve China’s monetary policy framework system,continue to promote exchange rate marketization and interest rate marketization reform,improve China’s financial market and keep it running well.The function of the stock market.Second,the central bank of China should formulate monetary policy and pay attention to the monetary policy of foreign countries.While actively responding to changes in foreign monetary policy,we need to maintain the independence of China’s monetary policy.