The evolution of monetary policy implementation in China

Hui Yuan and Geyang Xie

Chapter 5 in Central Banking and Monetary Policy Implementation, 2025, pp 96-118 from Edward Elgar Publishing

Abstract: This chapter provides an overview of central banking and monetary policy implementation in China. The transition of the Chinese economy from a centrally planned system to a market economy continuously shapes the functions and behaviors of China's central bank, the People's Bank of China (PBC). It has multiple policy objectives including price stability, economic growth, employment level, financial stability and equilibrium of balance of payments. To achieve these goals, the PBC utilizes both quantitative policy tools and price-based instruments, which are developed from economic theories and international experience but with Chinese characteristics. After about three decades of market-oriented reform of the interest rate, China has established a relatively comprehensive market-based interest rate system, which leads to a strategic shifting from quantity-oriented to price-oriented management in the monetary policy framework. With the deepening of reform aiming at building a high-standard socialist market economy, the monetary policy framework will be further improved.

Keywords: Multiple goals; Market-oriented reform; Money supply; Quantitative control; Price-based control; Interest rate corridor (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035302796
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