China’s Monetary Policy Framework

Zhaoyan Guo ()
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Zhaoyan Guo: Qingdao Chengyang District No.1 Senior High School

A chapter in Proceedings of the 2024 2nd International Conference on Economic Management, Financial Innovation and Public Service (EMFIPS 2024), 2025, pp 726-737 from Springer

Abstract: Abstract In recent years, the intermediate target of China’s monetary policy has gradually shifted from quantity based to price based, which is also reflected in the People’s Bank of China(PBC)’s 2024 Q2 Monetary Policy Implementation Report. In the report, the PBC mentioned the need to reform the pricing mechanism of LPR, which means decoupling LPR from MLF interest rates and gradually linking it to the 7-day reverse repo rate. In order to explore the reasons for the reform, this article first reviews the discussions on monetary policy in the literature, sorts out the transmission path framework of China’s monetary policy, and finally summarizes the reasons and directions for the reform of the PBC. In short, the PBC is gradually forming a price based monetary policy target, which is also an important aspect of China’s reform.

Keywords: Monetary policy transmission; Reform; Interest Rate (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-706-9_65

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DOI: 10.2991/978-94-6463-706-9_65

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