China Inflation
In recent years, China has met price of commodities rising quickly, inflation has affecting the overall economy. In this article, I will analyses last five years status of China inflation, explain the cause and effects, then base on the cause and effects, giving some solution to deal with the inflation.
According to the definition of economics, inflation refers to the number of currency in circulation more than economic operation needed, and then cause currency devaluation and a persistently rising price level. In order to precisely explain inflation in China, I selected last five years inflation rate to analyze the overall condition about China inflation.
Inflation rate,
The following chart shows last five years inflation rate and trend of change.
* In these chart, we can clearly see that, after 2008 years high inflation rate, inflation rate has fallen during the 5 years. But the size is not big. Since 2009, the inflation rate was going a new round of the rising trend. On the surface, china inflation is not so high, but some of the industry's price rising greatly, such as agricultural products and real estate industry. And during last thirty years, overall commodity price in china has kept rising quickly. So China inflation is still a serious problem.
The cause of China inflation
Demand-pull inflation
The inflation because of aggregate demand excessive increase is called demand-pull inflation. In order to deal with the financial crisis in 2008, to speed up the pace of economic growth in China, the central government carried out 4 trillion RMB investments and a series of stimulate measures to expand domestic demand. In China, the fixed assets investment increased 30 %( compared to 2008 )，the amount of fixed assets investment is 22.46 trillion RMB in 2009( 65.9% in annual GDP ) and 27.81 trillion RMB in 2010( 69.8% in annual GDP ). Depends on the huge number of investment and loans, China economic recovered faster in the world, on the other hand
According to the definition of economics, inflation refers to the number of currency in circulation more than economic operation needed, and then cause currency devaluation and a persistently rising price level. In order to precisely explain inflation in China, I selected last five years inflation rate to analyze the overall condition about China inflation.
Inflation rate,
The following chart shows last five years inflation rate and trend of change.
* In these chart, we can clearly see that, after 2008 years high inflation rate, inflation rate has fallen during the 5 years. But the size is not big. Since 2009, the inflation rate was going a new round of the rising trend. On the surface, china inflation is not so high, but some of the industry's price rising greatly, such as agricultural products and real estate industry. And during last thirty years, overall commodity price in china has kept rising quickly. So China inflation is still a serious problem.
The cause of China inflation
Demand-pull inflation
The inflation because of aggregate demand excessive increase is called demand-pull inflation. In order to deal with the financial crisis in 2008, to speed up the pace of economic growth in China, the central government carried out 4 trillion RMB investments and a series of stimulate measures to expand domestic demand. In China, the fixed assets investment increased 30 %( compared to 2008 )，the amount of fixed assets investment is 22.46 trillion RMB in 2009( 65.9% in annual GDP ) and 27.81 trillion RMB in 2010( 69.8% in annual GDP ). Depends on the huge number of investment and loans, China economic recovered faster in the world, on the other hand