Yi Gang — China's monetary policy framework - supporting the real economy and striking a balance between internal and external equilibrium

My speech is composed of four parts. The first part is an introduction to China’s monetary policy framework, the second part clarifies how monetary policy supports the real economy, the third part is about how to prevent and resolve financial risks, and the last part focuses on how to strike a balance between internal and external equilibrium. As we know, the Law of the People’s Bank of China explicitly stipulates that the ultimate goal of China’s monetary policy is to maintain currency stability and thereby facilitating economic growth. To maintain currency stability has two tiers of meanings: internally it means to maintain prices stable and externally it means to keep RMB exchange rate basically stable at an adaptive and equilibrium level....

BIS
Yi Gang: China's monetary policy framework - supporting the real economy and striking a balance between internal and external equilibrium
Lecture by Mr Yi Gang, Governor of the People's Bank of China, at Chang'an Forum, held by the Chinese Economists 50 Forum, Tsinghua University, Beijing, 13 December 2018

Xinhua — China eyes more proactive fiscal policy

China will pursue a more proactive and effective fiscal policy with government fiscal deficit projected to be 3 percent of its GDP, according to a government work report available to the media on Sunday.

While the deficit-to-GDP ratio stays unchanged from last year, the government fiscal deficit volume is set at 2.38 trillion yuan (about 345 billion U.S. dollars), a year-on-year increase of 200 billion yuan, said the report to be delivered to the national legislature annual session.

In a breakdown, the projected deficit of the central government is 1.55 trillion yuan, and that of local governments is 830 billion yuan.

Keeping the deficit-to-GDP ratio unchanged at 3 percent aims to "allow for further reductions in taxes and fees," the report says.

Tax burden on businesses is expected to be further eased by around 350 billion yuan, and business related fees will be further cut by around 200 billion yuan to benefit market entities.

"We will keep government spending low and enrich our people," says the report, promising that the government will squeeze out more funds to cover cuts in taxes and fees....

China.org.cn
China eyes more proactive fiscal policy

Xinhua

See also

China to pursue prudent, neutral monetary policy

China sets 2017 GDP growth target at around 6.5%

Traditional growth engines, which are losing steam, can regain momentum in the long run only if the country patiently pushes ahead with reforms to foster innovation and encourage industrial upgrading.

Vitality of new growth drivers can be unleashed only if the country continues efforts to streamline administrative procedures and scale back government controls.

Financial risks can be diffused only if the country accelerates reforms in the sector to further regulate market operations, crack down on illegal practices and channel credit to support the real economy.

Private firms can prosper only if the country advances reforms of state-owned enterprises and opens up more sectors to private investment.

Moreover, the impact of protectionism can be mitigated only if the country continues to promote reforms while further opening up its economy to the outside world.

Though these changes are painful at times and their benefits take time to manifest, they are the only way to carry the economy forward.

Deepening reforms the only way forward for China's economy

Lingling Wei — Loosening the Peg

China moving closer to floating the RMB.

Across the Curve
Loosening the Peg
Lingling Wei