The 20-year-old's four-month loan with the League One Shrews ends in January.
"Why change the environment? Why does he need to go and play in the Championship?" Pardew told BBC Sport.
"I'd be quite happy for him to stay where he is - the manager's done a super job with him."
Kaikai has netted five times in 12 league games for Town so far and it is the competitive nature of life in League One that Pardew wants the player to carry on experiencing.
"He's liked playing for the Under-21s, but there's no league table and at that level (at Shrewsbury) it's life and death," he said.
"For Sullay to deliver there is great news for us  - I'm very pleased and if I don't call him back, hopefully he can stay there."
Shrewsbury Town manager Micky Mellon is doing a "super job" with striker Sullay Kaikai and he is better off there than at a Championship club, says Crystal Palace boss Alan Pardew.