Imported Inflation Of China: An Analysis On Its Mechanism And Demonstration

With the implement of China's open policy, inflation in china is more easily affected by imported factors. The research on China's inflation starting in 2003 is important and helpful to carry out correct policies in order to maintain macroeconomic in stable situation. Firstly, this thesis draws lessons from structuralist theory of inflation when analyzing the theory of imported inflation. Secondly, the thesis uses the Scandinavia and Mundell-Fleming models to elaborate how the imported inflation comes into being by the way of international trade and capital inflow under different exchange rate system. Based on the analysis above, the thesis puts some demonstration on both international trade channel and capital inflow channel using the data of 2003-2005. It turns out that the imported factors indeed play an important part in the inflation starting in 2003. Finally, the thesis puts forward some countermeasures to relieve the negative effects of the imported inflation in our country. Because the imported inflation in our country embodies defects in the economic structure and financial system, so the effective countermeasures should be the followings: adjusting the industrial structure; setting the long-and-medium strategies of the energy sources utilization; reinforcing the control of the capital inflow, and so on.