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The New Normal of China’s Macroeconomic Policy
Zhang Xiaojing
Academic Division of Economics, Chinese Academy of Social Sciences, Beijing, China
Abstract: This paper summarizes the theoretical background and realistic considerations
for the emergence of the new normal of macro policy. The characteristics of the new normal
of macro policy are as follows: 1) a supply-side approach in response to growth slowdown;
2) understanding economic heterogeneity and growth disequilibrium and paying attention
to structural regulation; 3) highlighting strategic planning and broadening the horizon
of macro policy; 4) re-establishing a benchmark of macro policy and re-initiating local
competition; 5) balancing the interests of various stakeholders and understanding the
political economy of macro policy; 6) respecting the spillover effects of major countries
and implementing responsible macro policies; 7) respecting “market determinism” and
recognizing the limitations of macro policy; and 8) propelling institutional developments
and creating a basic framework of macro policy. This paper concludes that the new
normal of macro policy is not simply a passive adjustment to the new normal of economy
but represents an initiative of proactive response that steers the economy towards a more
advanced form. In particular, the following issues should be clarified in current macro
policy: some of the characteristics will be corrected or phased out, some that coincide with
the new normal will be abreast with the times, and some require that a new trail be explored
through innovation of macro policy. These components will constitute the basic framework
for China’s macro policy to transition towards the new normal.
Keywords: new normal, innovation of macro policy, Chinese characteristics
JEL Classification: E60, O11, O20
