The Impact Of The Spillover Effect Of Japan’s Super Quantitative Easing Monetary Policy On China After The Financial Crisis

Japan has adopted a continuous quantitative easing monetary policy after the financial crisis. In response to the adverse impact of the financial crisis, Japan adopted the widespread easing monetary policy, despite it did have a certain effect, it was difficult to curb the decline of Japan’s economy. To boost economy and pull it out of deflation, Japan continues implementing quantitative easing monetary policy. Abe’s Cabinet has conducted the quantitative easing monetary policy with an unprecedented scale of both the quality and quantity. The objectives of Japan’s quantitative easing monetary policy have gradually changed from responsing to the economic crisis to stimulating economic growth and controlling deflation, policy implementation efforts are also greatly enhanced.According to Mundell-Fleming-Dornbusch (MFD) model and the model of New Open Economy Macroeconomics (NOEM), Japan’s super quantitative easing monetary policy not only has effects on its economy, but also has the spillover effects on other countries. In the Third Plenary Session of the 18th CPC Central Committee, China has established National Security Commission of the Communist Party of China. Because economic security is an important part, so it is very necessary to determine the impact of external factors on China’s economic security and then take decisive and effective measures. Japan’s quantitative easing monetary policy is still in full swing, Chinese and Japanese economic and trade relations are complicated, then China should treat that policy seriously and take actions to deal with the bad influences. Therefore, this thesis trys to explore the impact of the spillover effect of Japan’s super quantitative easing monetary policy on China after the financial crisis based on the SVAR model, after deep understandings of the trajectories and features of these policys. To measure the impact of Japan’s super quantitative easing monetary policy on China, this thesis built the SVAR model and conducted the impulse response and variance decomposition analysis. This thesis shows Japan’s super quantitative easing monetary policy has a significant negative impact on China’s output, squeezes the regulatory space of China’s monetary policy in the short run., the spillover effect of this policy is conducted through both financial and trade channels. In order to reduce the negative impact of Japan’s super quantitative easing monetary policy on China, China should enhance the regulation of international short-term capital liquidity, continue to promote prudent monetary policy and fiscal policy, implement reform of the supply side and promote trade diversification.