Research On Risk Identification And Prevention Of Imported Inflation In China

The report of the 20 th National Congress of the Communist Party of China was proposed that China adheres to a high level of opening-up to the outside world and emphasizes that China will adhere to the correct direction of economic globalization.However,as China’s participation in globalization continues to deepen,under the constraints of the existing Jamaica system and the payment system with the US dollar as the main world currency,once the US dollar depreciates,it will be transmitted to the domestic market through trade and capital channels,forming imported inflation.Quantitative easing was first proposed by Japan and has become an unconventional monetary policy for central banks to resist economic crises and help economic recovery.The four rounds of quantitative easing in the United States have caused economic damage to countries settled in US dollars around the world.Although China has continuously taken measures to resist it,there are still risks that have leaked out,and the risk of imported inflation still deserves our attention.In this context,a reasonable analysis of the risk characteristics,transmission paths,and risk levels of input inflation,followed by policy recommendations for prevention,not only enriches the methods and theoretical basis in this field,but also provides some theoretical support for relevant decision-making departments.It has important practical significance for China’s high-quality and stable economic development and resistance to external price shocks.This article first introduces the economic theories involved in input inflation through literature review,and analyzes in detail the changes in general transmission channels under the influence of policies in China through the Mondell Fleming model.Secondly,the particularity of China’s economic policies highlighted by its ability to effectively resist imported inflation was introduced.Once again,through decomposition analysis,establish a decomposition tree to qualitatively identify the risks that still exist in China.On the basis of this theoretical analysis,the vector error correction model(VECM model)was used to empirically test the relevant variable data from January 2008 to June 2022,and to calculate the impact of quantitative easing on China’s economic related variables.Once again,the risk matrix was used to conduct a risk rating,clearly defining the approximate range of each indicator under each risk level.Finally,policy recommendations are proposed based on the current economic policies and potential risks in China,and prospects for future research directions are proposed.The research results show that imported inflation is indeed introduced into China from the international market through the capital,cost and money supply channels,causing the risk of CPI rise,exchange rate fluctuations and depreciation of foreign currency assets in China,but the impact on CPI and exchange rate is not significant.Exchange rate fluctuations are mainly affected by trade surplus,and the imported reason is only short-term impact.The risk matrix method rating results show that the risk of CPI increase in China is at level II(mild inflation),the risk of exchange rate fluctuations is at level I(crawling inflation),and the risk of foreign currency asset shrinkage is at level III(severe inflation).Finally,targeted suggestions were put forward from the aspects of strengthening China’s strategic resource reserves,accelerating the development of international and domestic dual circulation,actively promoting the reconstruction of the international monetary system,and actively promoting the reconstruction of the international order.These suggestions have reference value for China to formulate anti inflation policies for imported inflation.