Analysis And Thought About The Current Deflation In China

It has appeared for the first time in China since the founding of the Pepople's Republic of China .Considering from the international context ,it has undergone frequent occurrence since 1930s and attracted widespead attention from various countries. However ,compared with inflation ,the oretical reseach on deflation and corresponding suggested solutions have been rather weak. During the recent several years, a heated discussion on deflation has been carried out in our country with deflation phenomenon. The theoretical and industrial world have inquired into inflation from different angles and on different levels, and come up with various valuable academic viewpionts and suggested polices. On the whole ,however, the oretical research on deflation in our country has been weak, and we are lacking of experience in dealing with the issue. The paper attempts to present a systematic analysis and exposition of deflation ,put forward a series of corresponding suggested solutions on the basis of fundametal theoretical research combined with the actual situation in our country.The paper focuses on reaching in the basis of deflation and the actual situation in China concerning with deflation. Proceeding from the basic throry, I make an analysis and judgement of China's, contemporary economy situation, and draw the conclution that deflation exists in today's China. Then I present a present a theoretical analysis of deflation. On the basis of a thorough exposition of the causes ,nature and effect of deflation in our country, I put forward a series of policies with the monetary policy as the corner stone to trackle our present deflation. Finally , on the basis of analyzing and comparing domestic and international polices on dealing with the issue, some suggestions are put forward on the choice and composition of microeconomic policy. On the structural level, the paper probes into the issue from three aspects. The paper is divided into the issue from three aspects.Part one , including the first and the second chaperts ,discusses on the basic theory on definition of deflation and understanding of the concept and economic situation in China today, at the end of the chapter ,on the basis of the nature and judging criterion of deflation^ conclusion is drawn that there has been deflation in our country since 1998. In addition, the nature of our present deflation is discussed.Part two, including the third and the forth chapter, is the key part of the paper .presenting a theoretical analysis of China's deflation. First the paper about the causes of China's deflation, which are believed to complex. Among the various causes, the influence of the financial crisis in Asia is thought to be the direct cause while the supply restraints of domestic economy are considered to be the essential ones. Then , the paper analyzes two special phenomena concerning our current deflation under the loose microeconomic policy and the existence of deflation and yearly increase of monetary supply. Finally, the paper discusses the economic and financial effects about China's current deflation. At present, deflation in China does more harm than good, and demands effective solution.Part three, including the fifth and sixth chapter, discusses how to improve the effects of monetary policies in order to trackle deflation . On the basis of drawing on the experiences of other countries, and of thought of effects on monetary policies and financial policies ,the paper put forward the basis thesis : the policy composition with monetary policy as the key point should be the main tactics against deflation on the basis of taking into consideration of China's reality and analyzing the effects of the microeconomic policies.