Analysis of the Impact of US Quantitative Easing Policy on China's Macro Economy
DOI:
https://doi.org/10.54097/2zjt2679Keywords:
Quantitative easing, Inflation, Monetary policy, Capital marketsAbstract
The 2008 financial crisis caused many large enterprises to go bankrupt. In order to revitalize the crumbling economy and inject liquidity into the financial markets, US has carried out four rounds of QE policy. Since the COVID-19, America has resorted to unlimited quantitative easing in hopes of saving economy. The United States' QE has an impact on China's economic development due to their frequent economic interactions, and this impact will unavoidably spread as a result of QE's spillover effects. This research examines the Fed's QE monetary policy influence on Asian's biggest country economy in two time period, after the 2008 financial crisis and during the new coronavirus pandemic, in depth using current theories. In this study, the content of the QE monetary policy in the American continent is introduced, the implementation backdrop and impact of the policy are examined. The main focus of this paper is to present the impact of US QE monetary policy on China’s economy. First of all, US policy impact will inevitably spread to China's monetary policy and exchange rate policy. Secondly, the QE’s spillover effect of Chinese inflation is analyzed from RMB appreciation and commodity price rise. Third, the capital market's strong liquidity will lead to the inflow of international capital into our country due to the United States' QE monetary policy, so the impact on our capital market is analyzed. Fourthly, it analyzes the impact of dollar depreciation brought about by QE on the China's foreign exchange assets safety.
Downloads
References
Xin Weng, and Xianhui Meng." Research on the influence of US QE policy on Sino-US trade." Academic Journal of Business & Management 3.0.8.0(2021). doi: 10.25236/AJBM. 2021. 030807.
Weiyu Cao, Study on the influence mechanism of US monetary policy on Chinese economy [D]. Jilin University, 2020. DOI: 10. 27162/d.cnki.gjlin. 2020. 007205.
Qirong Zhu, and Mingsong Sun. The economic impact of US QE4 policy on the world's major economies and China's countermeasures [J]. Financial economics research, 2020, 35 (03): 77 - 89.
Shu Mei Chiang, et al." Transmission effects of the U.S. and China monetary policy shocks on the world." Applied Economics 51.46 (2019). doi: 10.1080/00036846.2019.1610707.
Romanos Priftis, and Lukas Vogel. "The macroeconomic effects of the ECB’s evolving QE programme: a model-based analysis." Open Economies Review 28.5 (2017). doi: 10.1007/s11079 - 017 - 9460 - 1.
Park, et al." Capital Flows During Quantitative Easing: Experiences of Developing Countries." Emerging Markets Finance and Trade 52.4 (2016). doi: 10.1080/1540496X.2015.1103136.
Qun Lin. “The impact effect of the US quantitative easing policy on China's financial security” [D]. Ocean University of China, 2014.
Jiang Z. “Assessing the Effect of Quantitative Easing on the US Economy from 2008 to 2015 by a Bayesian-VAR Model” [C]//Wuhan Zhicheng Times Cultural Development Co., Ltd. Proceedings of 2nd International Symposium on Social Science and Management Innovation (SSMI 2019). Atlantis Press, 2019: 9. DOI: 10.26914/c.cnkihy.2019.048881.
Mulaahmetović Inda." Quantitative Easing and Macroeconomic Performance in the United States." Journal of Central Banking Theory and Practice 11.3 (2022). doi:10.2478/JCBTP - 2022 - 0024.
Stephanos Papadamou, Costas Siriopoulos, and Nikolaos A. Kyriazis." A survey of empirical findings on unconventional central bank policies." Journal of Economic Studies ahead-of-print. ahead-of-print (2020). doi: 10.1108/jes - 04 - 2019 - 0186.
Mercédesz Mészáros, and Gábor Dávid Kiss." Spillover effects of unconventional monetary policy on capital markets in the shadow of the Eurozone: A sample of non-Eurozone countries." Review of Economic Perspectives 20.2 (2020). doi: 10.2478/revecp - 2020 - 0008.
Yao Wei, and Alexiou Constantinos. "On the transmission mechanism between the inventory arbitrage activity, speculative activity and the commodity price under the US QE policy: Evidence from a TVP-VAR model." International Review of Economics and Finance 89. PA (2024). doi: 10.1016/J.IREF.2023.08.003.
Jong‐Eun Lee." Exchange Rate Dynamics with Foreign Reserves: Revisiting the Dornbusch Overshooting Model." Review of Development Economics 20.2 (2016). doi:10.1111/rode.12234.
Su Jung Bin, and Kao Yu Sheng." How does the crisis of the COVID-19 pandemic affect the interactions between the stock, oil, gold, currency, and cryptocurrency markets?" Frontiers in Public Health 10. (2022). doi: 10.3389/FPUBH. 2022. 933264.
Schen P Y, Robert B, Xuan H D, et al. “What drives cross-market correlations during the United States Q.E.?” [J]. International Review of Financial Analysis, 2022, 83.
Al Abri Ibtisam, Saboori Behnaz, and Al Humaidi Razan." The dynamics of the relationship between foreign exchange reserves and import demand function." Cogent Economics & Finance 11.1 (2023). doi: 10.1080/23322039. 2023. 2189623.
Min Zeng." The Development, Challenges and Suggestions of Digital RMB and RMB Internationalization." International Journal of Frontiers in Sociology 5.7 (2023). doi: 10.25236/IJFS.2023.050715.
Anqi Zhang. “Study on the influence of RMB joining SDR currency basket on foreign exchange reserve asset portfolio” [D]. Hunan University, 2018.
Xing Wu. “Robustness of the financial system and financial regulation: An empirical comparison between foreign direct investment and "hot money"[J]. New Finance, 2016 (05): 55 - 59.
Fanhe Meng. “Study on the impact of the US quantitative easing monetary policy on China's economy” [D]. Jilin University of Finance and Economics, 2015.
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
