The Selection Of China Quantitative Monetary Policy Intermediary Target

The choice of monetary policy intermediary goal is of great importance of a country’s economy. From the practice course of the world, the total credit, money supply, interest rate, the rate of inflation all had been treated as the intermediate target of monetary policy, which one to select as the intermediate target is closely related to its national conditions. Different countries will select different intermediary goal to achieve macroeconomic regulation and control in different stages of developmentAfter more than30years of reform and opening-up in China, the market economy system has been established. The economy is keep growing and the macroeconomic regulation and control system is increasingly perfect. The intermediary target of monetary policy also shaken off the shackles of the planned economy thought, the "total credit" had been transferred to "the money supply". The Money Supply has acted as intermediate target for eighteen years. In the initial stage, money supply does play an important role in China’s macroeconomic regulation and control, but with the expanding financial markets and diversified structure, the controllability is no longer significantly related to economic performance, the validity of Money Supply as intermediate target is disappearing. Especially in recent years, the current monetary policy cannot have good inhibitory effect on overheating economy.In this context, the People’s Bank Of China put forward the index of "total social financing" as an important reference index of monetary policy, which caused widespread debate from all walks of life.This paper combines qualitative analysis with quantitative analysis method, based on summarizing the predecessors’ research to do comparative analysis for "money supply" and "total social financing" of the of two indicators, and judging advantages and disadvantages of both from the perspective of Monetary Policy Intermediary Goal. This article firstly combs the evolution of macro flow index as a monetary policy intermediary goal and describes the produce, development, application and change process of the Macro-liquidity Index from a historical perspective. And then do the controllability of qualitative comparative analysis of "The Money Supply" and "Total Social Financing". Then explores correlation of the M1, M2, and the total social financing to the real economy empirically, and build VAR model to explore the relationship between GDP, CPI and the above three index. The final part puts forward the policy suggestions according the comprehensive analysis results.