Impact Of International Oil Fluctuations In Prices Over China's Economy And Its Countermeasures

In recent years,the international oil price has fluctuated gradually,influenced by production,supply and demand,politics,economy and so on,and shows a rising trend. In 1998,the establishment of the oil pricing mechanism between China and other countries in the world makes our economy doomed to be influenced by the international oil price.China,as one of the world's largest oil-consuming countries,has become more and more dependent on the importing of foreign oil.As a result,the study of the impact of international oil price on China's economy and its transmission mechanism plays a very important role in the understanding of how international oil price affects China's economy as well as what measures should be taken in the face of oil price shocks.Based on the price transmission mechanism theory,this paper makes a research on how the international oil price affects the operation of China's macro-economy.Then, from the macro level,it studies the relation of the fluctuations in international oil prices and China's consumption,investment,trade and GDP through co-integration analysis. From the micro aspects,the author establish input-output tables and price models to study the impact of the fluctuations of international oil prices on the specific sectors of China's national economy.The study indicates that the increase of oil price will lead to declination in output,raising in cost of all sectors,reduction in investment and consumption and the slow growth of GDP,thus influencing the operation of China's national economy.Therefore,we should speed up to establish and improve the market-oriented oil pricing mechanism,accelerate the development and utilization of new energy,make better use of energy,quicken the implementation of state oil security strategy,and maintain the smooth running of the national economy.