Research On The Impact Of Trade Volume And Structure Of Price Fluctuations

China’s consumer price level has significantly fluctuated three times since1978.From1993to1995, the Consumer Price Index (CPI) rose by14.7%,24.1%and17.3%respectively. While from1997to1999, CPI experienced a consecutive fall fortwenty months. From July to November in2007, CPI rise rapidly, what’s more, a6.7%growth rate took its place and reached a new peak in the latest ten years.Correspondingly, domestic demand on consumption goods has transformed andupgraded three times in the mean time. The first upgrading happened in the beginningof Chinese economic reform, the proportion of daily consumption goods descended,while the proportion of goods aimed at enjoyment and development ascended. Thesecond upgrading happened during the1980s and1990s, in this period householdpurchases such as durable electrical goods increased gradually with a trend towardshigh quality. The third transformation which is taking place is represented by a highgrowth of consumption on education, entertainment, tourism and other service.There is few research on the relationship between price fluctuations, the internaltrade and the external trade. Among the few researches little attentions was focused onthe relationship among all the three aspects. This paper firstly retrospects andsummarizes relative theories, then starts theoretical research from the perspectives ofmonetary supply a, employment as well as the relationship between supply anddemand and the total volume of trade. Using a combination of theoretical andempirical analysis, this article utilizes a VAR model to verify the former hypothesesand comes to the conclusion that the export volume has a predominant influence onprice fluctuations while the domestic consumption is a secondary factor. Changes ofthe proportion of total imports on total sales of consumption goods makes a greatercontribution on price fluctuations than the proportion of the total exports on the totalretail sales of social consumption goods. Finally this article put forward severalrelevant suggestions according to the research conclusions.