Analyis On China's Monetary Policy During The Period Of Deflation

With the change of the economic environment home and abroad, the conflicts of insufficient efficient demand and deflation emerged after the year 1997 when China realized its macro-economic soft-landing. Under this circumstance, China changed its moderately tight monetary policy and adopted the expansive monetary policy to guard the deflation by moderately increasing money supply. However, it was proved by practice that for this time the expansive monetary policy did not successfully stimulate the new round economic recovery as it did before. This thesis, with the choice of monetary policy during deflation period, its restrictions and the effect analysis on expansive monetary policy as the start, studies the reason of ineffect of this expansive monetary policy. The writer holds that the major reason is lack of prompt reaction from the economy entities has blocked the monetary conduction process. To tackle the problems above-mentioned, the thesis points out that it is more important for China to take various necessary measures to dredge the monetary conduction channel when implementing the expansive monetary policy. And it puts forward policy suggestions as follows: speeding up the financial reform, establishing and perfecting the money market system, enhancing the enterprises?sensitivity to the monetary policy conduction signals, improving the social security system and directing the public expectation. In addition, it needs the active fiscal policy to coordinate with.