Dissertation > Economic > Fiscal, monetary > Currency > China's currency > Inflation

Industry Research on the Effects of Inflation in China

Author LiuHongLiang
Tutor ChengChangYu
School Hebei University
Course Political Economics
Keywords inflation imbalance in industrial structure supply and demand
CLC F822.5
Type Master's thesis
Year 2009
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In a market economy, all economic activities run under the laws of the market, the demand and supply of goods are adjusted by commodity price, which promote the development of the market economy. However, the non-transparent information of demand and supply, in addition to the production cycle, often cause changes in commodity prices, in a highly developed commodity economy today, a commodity price changes usually lead to changes in the prices of other commodities. For various reasons, if the changes of commodity prices persist for some time, inflation occurs.The inflation brings harm to the state economy, people’s life, and social stability, so all countries in the world talk about "inflation" terribly. In order to control inflation, the world has to take a long time, pay a heavy price. Inflation in the present-day economic and social terms, is fiercer than a tiger. Clearly, to control the inflation is too late when it happened. then the inflation can be nipped in the bud? Or can we minimize the harm? This article think may.This article through comparative analysis, I focus on the commonalities of three inflations since reform and opening-up happened in our country. I hope our country can find a fundamental inflation reasons through this three inflations. Chinese inflation has its unique characteristics, namely:China’s irrational industrial structure, the rapid promotion of reform and opening up, and eager to set up a socialist market economy resulted in the occurrence of inflation in our country. I describe the characteristics of inflation which happened in our country in 2007. through comparing with previous three inflations, I point out that the inflation in 2007 was the same as the previous three inflation.I analyze the causes of the inflation that happened in our country in 2007 and point out the countermeasures. Both international and domestic factors contribute to China’s inflation. As far as international factors, our country’s foreign exchange reserve is too large, resulted in excessive liquidity of RMB. As far as international factors, Chinese industrial policy emphasis on the development of export industry, resulted in imbalance of the industrial structure. when the international raw materials prices increased, it is difficult for enterprises in our country internal digestion of raw materials prices, resulted in the occurrence of inflation. Now, under the impact of the international economic crisis, Chinese economy may deflate possibly since 2009. However, it can be said, regardless of our inflation is in 2007 or possible deflation in 2009, are caused by imbalance in our industrial structure.

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