The paper takes the real business-cycles theory as theoretical background,applies impulse response function and variance decomposition to analyze the transmission effects and contribution degree of supply elements of steel industrial to output,and studies the impact of supply shocks on the fluctuation of steel industrial output.

During the last 26 years, aggregate economic fluctuation is influenced not only by demand shock, but also by supply shock in China.

Theoretically, the supply shock, which is unanticipated change of supply in the short run, is an important factor to the alteration of general price level.

In the case of a demand shock,this paper argues that the effective demand will affect exchange rate uncertainly but the prices will affect it in a definitely way,by contraries,under a supply shock circumstances,the effective demand will affect exchange rate definitely but the prices will affect it in an uncertainly way.

External Shocks and China s Inflation;

The Fluctuation of China's Macro-economy: Internal Adjustment or External Shocks?

Which Cause Inflation in China: External Shocks or Money Super-growth

The analysis with VAR model and impulse response function from the perspective of external impact shows that farmers income and social security system are the main factors that influence the demand for life insurance in China.

From the perspective of the system theory, this paper, by stu dying the external impact on the system, tries to explore the establishment of t he emergency system and the function of such a system in the sustainable develop ment of our country.

This paper wants to provide some thoughts,which may help the big emerging market countries overcome the external shocks and continue their leap-forward,by analyzing the propagation and impact of the global financial to these economies.