The Impact Of International Oil Prices On Domestic Prices

China is a major manufacturing country,the world's largest importer of crude oil and the second largest consumer of crude oil.Crude oil is highly dependent on foreign countries and will continue to maintain a high level for a considerable time in the future.The large fluctuations in international crude oil prices have exposed China's price system to increasing risks,causing a negative impact on the domestic macro economy and may even endanger the country's energy security.On March 26,2018,Shanghai Crude Oil Futures was officially listed and traded at the Shanghai International Energy Exchange(INE).Shanghai crude oil futures are denominated in RMB and are China's first futures product open to the outside world.Not only is it a supplement to the benchmark price system of the international crude oil futures market,it is also conducive to promoting the process of RMB internationalization.The issuance of Shanghai crude oil futures can be regarded as a watershed,an opportunity to re-examine the impact of international crude oil price fluctuations on China's price level.At present,the domestic impact of fluctuations in international crude oil prices on the domestic macro economy is basically concentrated on the direct transmission path,and there is little mention of the indirect transmission path.The reason may be: on the one hand,the direct transmission path is clear,the production link is clear,and China is a large manufacturing country,and the impact on the macro economy through production channels is obvious;On the other hand,China's financial market is slightly backward,and the indirect influence of financial channels is not obvious and complicated.However,with the continuous development of China's financial market,especially the issuance of Shanghai crude oil futures open to the outside world,it has provided a basis for the study of indirect transmission paths.The analysis of the indirect transmission path of international crude oil prices is no longer negligible.This article uses the VAR model to empirically analyze the impact of international crude oil price fluctuations on China's price level(CPI)before and after the launch of Shanghai crude oil futures from the two aspects of direct transmission path and indirect transmission path.After the launch of Shanghai crude oil futures,the efficiency of direct transmission and indirect transmission has been significantly improved,and the international crude oil price has greatly enhanced the early warning function of domestic inflation.The impact of the indirect transmission path on the CPI has greatly increased,surpassing the direct transmission path.It has become a very important direction to study the impact of international crude oil price fluctuations on China's macroeconomics,and it also puts forward higher requirements on China's financial market.