On China's Currency Policy

As an essential part of the national policy for the macro-economy, the monetary policy plays an increasingly important role in the development of the national economy. Monetary policy is used by all countries in the world to regulate and control their national economy on a macro basis. In China, the People's Bank of China began to function as the national central bank in 1984. In other words, the mechanism of national central bank has a short history of only 20 years, which means the monetary policy in its real sense also has a short history of 20 years in China. During these twenty years, great progress has been made in the economic reform, great changes have occurred in the system, mechanism and the mode of the development of the economy. As a result, the People's Bank of China has gradually become one of the most important departments for regulating national economy and monetary policy is becoming more and more important in regulating macro-economy. Moreover, monetary policy also plays an important role in promoting the social stability and economic development. However, we should also realize that the monetary policy in China is still "young" and experts only have superficial understanding of it both in theory and in practice. With the goal of developing the national economy towards a more open and globalized market, the monetary policy is experiencing changes andchallenges in the process of its formulating and implementing. Therefore, a very important and urgent task facing the economists is to study the monetary policy in a thorough, complete and systematic way. This kind of study is of great importance both in theory and in practice.The objective of this thesis is to analyze the immediate problems of the monetary policy in China which are found in its subject, utility goals, intermediate targets, means of implementation and conducting mode. This study is carried out by drawing lessons from western monetary policy theory and by making comparisons on a historical and international basis. In this thesis, the problems are analyzed by citing theories as well as listing examples so as to make the analysis logical. With the help of the analysis and by considering the actual situation of the economy in China, the author also gives some suggestions on how to scientifically formulating and effectively implementing the monetary policy in China after a careful anatomizing of China's monetary policy.This thesis first suggests the framework of studying the monetary policy, which consists of the subject, the utility goals, the intermediate goals, the implementing means, the conducting mode, the effectiveness etc. of the monetary policy. By definition, the monetary policy is the measure realized through conducting mode by its subject who chooses the intermediate goals and the implementing means. On the one hand, the author's research is carried out by studying the history, the problems ofthe monetary policy in China and the causes of these problems as well as the regulating effect of this policy. On the other hand, the research is done by analyzing the utility goals, the intermediate goals, the implementing means, the conducting mode and the effectiveness of the policy.The central bank is the one responsible for formulating and implementing the monetary policy. The effectiveness of the monetary policy is determined by the degree of the independence of the central bank. As the subject of the monetary policy, the central bank should make its judgment and formulate the policy accordingly in accordance with actual condition of the economic development regardless of the influence of the government organs and other interest groups. Only in this way, can economy develop in a favorable manner. China has a deep-rooted tradition of totalitarianism, which makes the central government play the most important role in social and economic development. This is especially true in the central government's control of the finance. Due to the heavy influence of the central government on the People's Bank of China, the central bank's independe...