According to a study in China and World Economy published by Wiley-Blackwell, the recent rise in Chinese prices is unlikely to affect Japan or the US. Conversely, there is evidence that the inflation in the US has had some impact on Chinese inflation.
This study “Does China Have Inflationary Effects on the USA and Japan?” uses several econometric approaches to assess the link between China, Japan and the US, and evaluates whether China can export inflation or deflation to the US or Japan.
Lead author, Mr. Tarhan Feyzioglu, Resident Representative – China, International Monetary Fund says, “With Japan and the US being two of China’s largest trading partners, transmission of inflationary pressures between parties is not unusual. However, our empirical analysis suggests that Chinese prices have a fairly small and temporary impact on U.S. and Japanese prices. This is partly because imports from China still make up a small portion of all goods bought in the US and Japan. China would need to dominate the international trade on a larger scale before any noticeable effects on inflation are felt.”
The study also suggests that because recent Chinese price pressures have been limited to food prices and not manufactured goods, the effects are likely to remain contained in China. Nevertheless, the study shows that global commodity prices are important for all these countries, and thus the recent surge in these prices would create upward pressure on inflation in all these countries.
This paper is published in Vol. 16, Issue 1 (Pg 1-16), Jan-Feb 2008, China & World Economy.
Media wishing to receive a PDF or schedule media interviews with the authors should contact Alina Boey, PR & Communications Manager Asia.
About China & World Economy
China & World Economy was launched in 1993 by the Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS). Originally self-published, the journal begins its official publishing partnership with Blackwell Publishing in 2006. Published six times a year, this journal combines original academic research works with policy review articles - many of its authors are distinguished Chinese economists from both academic and governmental circles. As the only English language journal in China devoted to the topic of Chinese economics, readers can expect objective, analytical and up-to-date quality content. With distinguished contributors such as economists from both the government and academic circles, the journal will provide an informed and balanced window on China, and will undoubtedly become essential reading for all those interested in China's development.
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