Understanding China's monetary policy: an institutional perspective. Issue 1 (2nd January 2019)

• Record Type: Journal Article
• Authors: Chan, Sarah
• Is Part Of: Post-communist economies. Volume 31:Issue 1(2019)
• Page Start: 1
• Page End: 18
• Publication Date: 2019-01-02
• Subjects: Monetary policy -- money supply -- monetary autonomy -- credit -- interest rate corridor -- liquidity; Post-communism -- Economic aspects -- Periodicals; Russia (Federation) -- Economic conditions -- Periodicals; Europe, Eastern -- Economic conditions -- Periodicals; 330.91717
• DOI: 10.1080/14631377.2018.1505695
• Languages: English
• ISSNs: 1463-1377

Abstract

ABSTRACT: Given China's status as a large transitional economy, analysing the country's monetary policy requires an understanding of the institutional and policy environment within which monetary policy operates. As China's monetary policy has multiple objectives and the central bank is subordinate to the State Council in monetary policy decisions, addressing deep-rooted structural issues and improving governance and institutions are essential so that monetary policy can be more focused and effective. Confronted with the Impossible Trinity dilemma, China faces daunting challenges in tackling the inevitable policy choice between monetary autonomy and exchange rate control as its capital account increasingly liberalises. This article analyses China's unique and evolving monetary policy framework from an institutional perspective and evaluates the challenges to monetary management and reforms. Relevant policy implications for monetary policy implementation are also discussed.