Reflection And Research Based On The Inflation In China

Based on the point of viewof currency ultra-inflationary, we analysisthe China’s currency over the policy-related factors andcharacteristics.With the reference to academic and the popularmethodology, we combined foreign experience analysis and the empiricalresults of the research to discuss the Chinainflation.Monetary ease leads a serious inflation risks that the central bank isfacing a dilemma that whether to keep the internal stability of the currencyor to keep the stability of foreign exchange rate.We deeply analyze theformation mechanism of China’s monetary system and exchange ratesystem. The higher inflation expectation comes from the reform of factormarkets and the undervalued foreign exchange rate. By analyzing theinevitable factor market reforms, funds outstanding for foreign exchangeand trade surplus, we can clearly recognize that theinflation expectations isdifficult to improve in a short-run.We are willing to start from a wider perspective and to discuss moredetails of the transformation of government functions.We find that themarketization is a good solution. Through the analysis of inflationtargeting, we recognize the limitations of the theoretical research andexperience abroad.Consider the uniqueness and severity of the inflationproblem in China, we express the view of enhance the independence of thecentral bank and accelerate industrial upgrading.