Since 2002, The Dollar Research On The Effects Of Inflation In China

Since China’s accession to the WTO, as China’s accelerated integration into the global economic integration, the healthy and high-speed operation of China’s economy more and more affected by international factors. Price stability is an important indicator of a country’s economy health. Since2002, China has experienced three times the course of inflation, the CPI have a larger increase. Throughout this three times of inflation, in addition to domestic factors, the role of international factors impacting has become increasingly evident. Performance of the impact of international factors:First, industrial raw material prices and food prices rising; foreign investment (including FDI and hot money) and a large influx, resulting in bank currency issuance, produce a huge impact on the control effective of inflation on monetary policy nature. The trend is clearly rising international commodity prices in recent years, showing strong demand in international markets and greedy speculative capital. However, these demand and speculation behind the background of global liquidity flood, a lot of capital cruising in the financial markets, to create a strong demand, exacerbated by the hype of speculative capital. Come analysis of the inflow of foreign capital, China’s rapid economic development has attracted a lot of inflow of foreign capital, hot money, hot money droves the great role of the rapid rise in foreign investment in China’s stock and property markets in2007. Behind these foreign capital is still the background of the global flood of liquidity. Where is the proliferation of global liquidity, the answer is the U.S. dollar. U.S. Internet bubble burst in2002, the depreciation of the dollar, the dollar issuance policy to stimulate the real estate market and low interest rates to stimulate investment is the key to the global liquidity. The depreciation of the dollar caused awash with liquidity, and then the rise in commodity prices, foreign capital inflows, which led to China’s CPI rose path is very clear. This article is use the VAR model to analysis the correlation between the dollar (U.S.＄the index NBDI), China’s CPI, the commodity price index (CRB), foreign exchange reserves (FS), to study the impact of the depreciation of the dollar on the price trend in China and the impact of the way. VAR empirical analysis found significantly negative correlation between the dollar index and the CPI, the CPI, CRB, NBDI pathways exist, the CPI FS, NBDI pathways exist. This governance for government macro-control inflation, particularly for treatment with imported inflation provides the policy basis for the Government in policy formulation at the same time pay attention to the impact of the depreciation of the dollar, at the same time to control the rise in commodity prices and foreign large inflows pathway, and thereby weaken the impact of the depreciation of the dollar to bring China’s inflation.