The Impact Of Exchange Rate Transfer On Import Prices

In 2018,China's trade surplus was 2.33 trillion yuan and its total foreign trade volume was 30.51 trillion yuan,a record high.Now China's foreign trade and import and export situation will also be affected accordingly.Apart from the fact that the slowdown of global economic development and the change of political situation will have a direct impact on the bilateral trade between China and other countries and on the price of imported products,the fluctuation of exchange rate caused by the change of China's macroeconomic development and other countries' political and economic situation will also affect the price of imported products.Considering the importance China attaches to import trade,the change of the amount of foreign trade caused by the price of imported products and the influence of the price of imported products on the domestic price level,it is necessary to study the price change of imported goods caused by the change of exchange rate.Based on the monthly data from January 2008 to December 2017,this paper uses the autoregressive distribution lag model to analyze the short-term and long-term impact of exchange rate changes on import prices before and after the exchange rate reform and in different industries.At the same time,it also analyses the lag period of the impact of exchange rate on import prices before and after the exchange rate reform in 2015.The results show that the exchange rate transfer effects of imported products in different industries are different.In the industries of food,machinery and coal,iron and petroleum,which depend heavily on imported products,the exchange rate transfer effects of imported products are inverse or not significant,while in the beverage cigarettes which dominate our products,the exchange rate transfer effects of imported products are not significant.In grass and other industries,the price of imported products has been over-passed.The exchange rate reform in2015 has no significant impact on the exchange rate transmission effect of import prices in most industries,but has a significant positive impact on the exchange rate transmission effect of import prices in food,machinery and chemical industries with higher pricing power of foreign manufacturers.In China,the price of imported products in most industries has the phenomenon of incomplete exchange rate transfer or no significant exchange rate transfer effect.Therefore,the degree of RMB exchange rate change affecting the overall price level in China through the import price transfer effect is relatively limited.In this case,the central bank has more space to implement and adjust monetary policy.When formulating more effective monetarypolicy,the monetary authorities of our country can focus more on economic growth,employment promotion and other objectives without worrying too much about the impact of exchange rate changes on domestic prices.