Loose fiscal, tight monetary policies suit future restructuring

LI Daokui, JIANG Hongping and XU Xin

Tsinghua University China and World Economic Research Center

Abstract:

Various statistical and theoretical analyses indicate that China will face a more difficult and complex international environment in the upcoming post-crisis era. China’s economy has come to a point where restructuring, which has been an important area of research, is inevitable. This paper looks first at the three symptoms of an unreasonable economic structure and their roots from institutional and development strategy aspects. It concludes that China’s basic economic restructuring policies should be oriented toward a loose fiscal policy and a moderately tight monetary policy on the basis of deepening institutional reform.

Key Words: Fiscal policy, monetary policy, economic restructuring, post-crisis era

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