An Empirical Study on the Relationship Between the US Wheat Prices and China's Food Prices

The change of the prices of wheat, a daily food in China, will have tremendous impact on the price levels of food in China. Over the recent years, the amount of wheat that was imported to China, especially that from the U.S., increased fast. As a result, the change of the U.S. wheat prices was likely to have some influence on the food prices of China. This article took the bulk commodity of wheat as an example to study whether the change of American wheat prices would have impacts on the price levels of food in China. The analyses used the scatter plots between the U.S.-China exchange rates and the food CPI in China, the amount of U.S. wheat export to China and the food CPI in China, the U.S. wheat prices and the food CPI in China, and the impulse-response graphs under the VAR model to find that the change of the U.S. wheat prices was positively related to the food CPI in China. In the end of the article, the suggestions to promote China's pricing ability on the bulk goods of food were proposed.