Policy Adjustments: Launched A Comprehensive Structural Fiscal And Financial Tools

Since the successful soft landing of Chinese economy in 1996, the economic growth has been declining. To promote a new round of economic growth, the central bank has lowered the interest rate for 7 consecutive times. What's more, the central government has also adopted activist fiscal policy since 1998. However, all these policies don't produce much effect.With the harmful consequences of Asian financial crisis left unconsidered, we find that the reason for unsuccessful fiscal and interest rate policy can be concluded as the result of inefficient economic growth for many years. The structural contradiction between supply structure under seller's market and demand structure under buyer's market has become the main obstacle to future economic growth, which also deepens the total production disequilibrium, overall economic slump and unemployment increase. All these problems demand the central government to carry out strategic adjustment, i.e. to activate structural fiscal and financial policy instruments which should play a leading role in overcoming the structural changes of economic contradiction.This thesis is divided into five chapters. Chapter one introduces the current situation of China's national economy. Chapter two points out the reason for the failure of activist fiscal and financial policies, and also the bounded long-term usefulness of these policies. Based on drawing lessons from successful structural adjustment during Japan's economic taking-off, chapter three puts forward the proposal that structural policies should be placed as the central adjusting position, and overall capacity policies should be a helpful policy tool. Chapter four summarizes the experiences and lessons of previous macro-economic central and structural adjustment since reform and opening to the outside world. Chapter five gives out practical policy recommendations for activating overall fiscal and financial structural policy measures.