A Study on the Transmission of Imported Inflation through the Trade Channel—From the Perspective of Import Structure

Abstract

This paper studies the effect of imported product structure change on inflation, and distinguishes between ordinary trade imports and processing trade imports. Results show that both high-technology products and low-technology products such as bulk commodities are of high proportion in China’s import structure. The former is mainly for general trade, while the latter is mostly for processing imports, which weakens its impact on domestic price. With China’s increasing dependence on international resources such as petroleum and minerals, the changes of international oil prices as well as other bulk commodities will be an important variable affecting China’s inflation level.