Analysis Of The Cause Of Structural Inflation In China

This paper gives a review of all rounds of inflation in China since1990s, andconcludes that the current inflation is a structural increase in commodity prices due toboth domestic and international factors. China has been faced with triple pressureconsisted of development, transition and stability. Policies are made due to short-turnsituations in most of the times. The pressure of inflation is never cured and easilyrevives with external shocks. The root cause of current structural inflation is a dualimbalance in both virtual economy and real economy. We should keep with positivefiscal policy and prudent monetary policy, allow a moderate increase in inflationtolerance, and focus on the transition of economic structure, in order to achieve theequilibrium between economic growth, price stability and a sound development withproper macro control.