ABSTRACT
This chapter studies the mismatch of inflation goals in China, with a view to finding out the deep implications of the differences in the dynamic nature of different inflation indicators for the choice and implementation of monetary policy and what can be learned from this. It analyzes the differences in the dynamic nature of China’s consumer price index (CPI) inflation rate and Gross domestic product deflator inflation rate as well as its difference with the linkage with monetary policy. The chapter explains the real problems for current inflation management due to the inflation goal mismatch which takes CPI as the single inflation target, and, based on this, puts forward specific suggestions for the current management of inflation in China, with a view to providing a scientific reference for decision-makers to develop targeted and forward-looking counter-cyclical policies.
