The Research On Chinese International Coordination Of Monetary Policy Under The Open Economy

Globalization of the world economy and financial progressively deeper levels, theformulation and implementation of monetary policy in a country are heavily influencedby other countries and economies. This effect is exhibited particularly betweencountries where exist frequent economic exchanges. When making its monetary policy,a country not only to solve economic and social contradictions, but also take othercountries’ related policy into consideration. This is what called resolving policyconflicts between countries through international coordination of monetary policy to acertain extent, and reducing interest loss. Since Reform and Opening Up, China’seconomic development has always maintained a high growth rate, the level of openingup gradually expanded, the formulation of Chinese monetary policy often lead toconflicts of interest between other economies and especially the United States.The paper studied the theoretical basis, the type and basic content of the monetarypolicy international coordination, and then conducted a study on China’s coordinationmode base on China and American using econometric models. Empirical analysis heldthe view that under the impact of U.S. monetary policy, China’s current coordination is apassive mode. However, for this passive coordination mode, it often leads to deviationfrom the equilibrium level of economic development, resulting in macroeconomiclosses on one hand; on the other, Non-cooperative economic cycle between China anAmerica exacerbate the frequency of this passive mode, making the macroeconomiclosses long standing, and then infer that the passive mode is undesirable. Finally, thecorresponding policy recommendations are presented, that to continuously improvepolicy independence, and participate in international policy coordination by adjustinginterest rates and exchange rate.