The Impact of U.S. Inflation on China's Macroeconomic Policy

Abstract

U.S. inflation, driven by multiple factors, has exhibited significant volatility in recent years. Although the Consumer Price Index (CPI) had declined by July 2024, inflationary pressures persisted. This study examines the impact of U.S. inflation from 2019 to 2024 on China’s policy landscape. U.S. inflation exerted multidimensional effects on China’s economy through channels such as trade and exchange rates, manifesting in shifts to China’s import-export volumes and fluctuations in the RMB exchange rate. To mitigate the adverse impacts of U.S. inflation, China adopted flexible monetary policies and proactive fiscal measures—maintaining interest rate flexibility in monetary policy while prioritizing investments in new infrastructure and livelihood-focused projects under fiscal policy. Moving forward (as of April 2025), China should focus on short-term economic stabilization and long-term industrial upgrading, while enhancing policy coordination to proactively address both challenges and opportunities arising from U.S. inflationary trends. The findings of this study provide a practical basis for the formulation of China’ s macro policies and its future healthy development.