In recent years, China and tiawan has attained price of commodities growing quickly, pumpiing has influencing the overall economic system. In this article, I will analyses last five years status of China inflation, explain the source and results, then foundation on the cause and effects, giving a few solution to deal with the pumpiing.
According to the meaning of economics, pumpiing refers to the number of currency in circulation much more than economic operation needed, after which cause currency devaluation and a constantly rising cost level. To be able to precisely explain inflation in China, My spouse and i selected previous five years inflation charge to analyze the entire condition about China pumpiing.
The following graph shows last five years inflation rate and pattern of change.
* In these data, we can clearly see that, after 2008 years high pumpiing rate, pumpiing rate provides fallen during the 5 years. But the dimensions are not big. Since 2009, the inflation rate was going a new round in the rising trend. On the area, china inflation is less than high, however, many of the industry's price increasing greatly, such as agricultural products and real estate industry. And during last thirty years, total commodity value in chinese suppliers has stored rising quickly. So China and tiawan inflation is still a serious problem.
The main cause of China inflation
The inflation because of aggregate demand excessive increase is referred to as demand-pull inflation. In order to deal with the financial crisis in 08, to accelerate the pace of economical growth in China, the central authorities carried out 4 trillion RMB investments and a series of promote measures to expand home demand. In China, the fixed possessions investment elevated 30 %( compared to 2008 )пјЊthe sum of set assets expenditure is 22. 46 trillion RMB in 2009( sixty five. 9% in annual GDP ) and 27. 81 trillion RMB in 2010( 69. 8% in twelve-monthly GDP ). Depends on the many investment and loans, China economic reclaimed faster on the globe, on the other hand some area presumes the extension expansion, break the balance of economical structure, provides formed a serious pressure of inflation. Harmful investment is usually other problem in demand-pull inflation.
1 . Employee salary rising
Wage expansion makes the development cost development, on given price levels, the money level of maker will reduce, manufacturers willing and are capable of supply the range of products is going to decrease, so that the aggregate source curve switch to kept, is induced the price level increase. In 2008 and 2009, the regular worker true wages indexes increase in the previous year were 11% and 13%. Over the same period, the GDP progress rates were 9. 6% and being unfaithful. 2% respectively. Worker common wage index rising more than GDP growth rate of the same period. Income growth \ the production costs and the total price level increase.
2 . Inflation triggered by the rising rates of raw materials In Cina, after the financial crisis of 08, the huge expenditure in set assets need a great number of raw material such as steel, wood and cement to support it. The phenomenon of demand greater than supply causes the rising price of wood, bare cement and stainlesss steel. That is the commencing of complete price rising. Imported pumpiing
In May 2011, the middle level between RMB and us dollar break 6. 5. China external dependence is actually large, the decrease in us dollar can transfer the influence to China. Because persistently rising price of international bulk commodity, the biggest importer and trade processing sectionвЂ”china, has endured huge pressure in expense growth. Alternatively, china is a biggest importer in essential oil, mineral, foodstuff. So if the price of those goods increase significantly, simultaneously, through the brought in channel affect the general price level in China, leading the imported inflation. Lately, because of the great investment prospect and admiration expectations of RMB, also result in a range of unknown...