Chinese exchange rate and price effects on G3 import prices

► We explore price and exchange rate linkages between China and the G3 (US, Euro-area and Japan). ► We find that reduced export prices from China contribute to depress import prices in the G3. ► The price effect in China due to lower cost is found to dominate the exchange rate effect for the US. ► Thus the RMB exchange rate policy matters little and a revaluation of the RMB has limited effect. ► But, a relatively flexible RMB-Euro rate does make the exchange rate effect influential.