High inflation in China and other developing countries has its roots in lax US monetary policy and individual countries cannot completely solve the problem by tightening their own monetary policy, according to research published March 24 by China International Capital Corporation Limited (CICC).
The report says international commodity and agricultural prices have a greater influence than the exchange rate of the Renminbi on China's consumer price index. Consumer price hikes in China are caused by the surge in world commodity prices, in turn a consequence of the depreciation of the dollar resulting from loose US monetary policy.
The report says the Chinese government should explain to the public the international roots of current high inflation. The government should not give the public an impression that China can handle the problem of high inflation alone since, if the government fails to deal with the problem as promised, public confidence will be affected.
For more details, please read the full story in Chinese. (http://www.caijing.com.cn/todayspecx/cjkx/2008-03-24/53794.shtml)
(China.org.cn March 25, 2008)
