China's Monetary Policy: Retrospect and Prospect
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چکیده
During the 8th Five-Year Plan Period (1991-1995), China achieved an average annual economic growth rate of 12 percent, with a tremendous success. Yet at the same time it also experienced serious inflation, with the residents consumer price index rising at an annual average rate of 12.9 percent, and even reaching a peak of 24.1 percent in 1994. In view of this problem, in the Proposal on the 9th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives to the Year 2010, the Central Committee of the Communist Party of China (CPC) specified in 1995 that curbing inflation was the primary task for macro-economic adjustment during the 9th Five-Year Plan period (1996-2000). They called for a substantial drop in the excessively high inflation rate, and stressed the importance of pursuing a moderately tight fiscal and monetary policies. In accordance with the requirements of the CPC Central Committee, during the late 8th Five-Year Plan period and the early 9th Five-Year Plan period, the People's Bank of China (PBC) adopted a variety of monetary policies to exercise strict controls over the total currency credits. The increase in broad money hit 34.5 percent in 1994, but it began to fall year by year after 1995, dropping to 17.3 percent in 1997. Moreover, the retail price and the consumer price plunged to 0.8 percent and 2.8 percent respectively in 1997. Yet China still maintained an 8.8 percent economic growth rate that year. The moderately tight monetary policy played a significant role in curtailing inflation.
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