Abstract: This paper analyzes the transmission channels of the US exchange rate strategy on China’s inflation in the post-Crisis era, and then constructs an econometric model to test the obvious international spillover effects. Based on the empirical results, the paper finds that the US strategic devaluation of the dollar had significant and negative impact on China’s inflation, while RMB exchange rate as well as China’s growth also had significant but positive impact on China’s inflation. Finally the paper recommends a broader daily fluctuation band of RMB exchange rate and a reduction of the various growth-stimulus policies for China.

Key words: US Exchange Rate Strategy, Inflation, International Spillover Effects, RMB Exchange Rate, Economic Growth