With the trends of slow growth and inflation pressures manifesting in the economy, our society is showing potential signs of stagflation. For many years, our country has been living on investment and exports to stimulate economic growth, lacking endogenous spending power. Due to the effect of macroeconomic policies, there exists a time lag effect of economic spillovers of import trade in the short run. It is thus is necessary to analyze the problem of economic stagflation, and ensure that it is nipped in the bud. The phenomenon of stagflation in a macroeconomic sense means the concurrent economic phenomena of economic stagnation, high unemployment and high inflation. There are two factors that increase stagflation risks: (1) Improper economic policy, such as a central bank allowing excessive growth in the money supply, or government over-regulation in the commodity and the labor markets. (2) Economic capacity being reduced by a negative supply shock. With the recent strategic shift of the United States, several regional issues have been continuously fluctuating in the Asia-Pacific region. Therefore, the research topic of this paper is to determine which policies should be enacted by the Chinese government in order to ensure sustained and healthy economic and social development. In this paper, we comprehensively analyze the potential factors which cause economic stagflation, and we propose several corresponding suggestions in order to preempt potential manifestations of this phenomenon.
展开▼
