The Effectiveness of Chinese Monetary Policy during the 2008 Financial Crisis

摘要

The objective of this paper is to explain the factors that led to the effectiveness of Chinese monetary policies during the financial crisis. As the crisis hit China, China’s economy faced two external shocks in the investment and export sector. The reliance on the international market, together with its constrained monetary policy and institutional problems, make it worthwhile to consider why China was the first country that recovered from the financial crisis. Through the analysis, the paper identifies three sources of the efficiency. The first concerns with the previous economic health. The second involves the well-coordinated fiscal and monetary policies and the last derives from China’s institutional characteristics. Moreover, it is argued that some policies made during the financial crisis may carry risks and other negative implications in the long run. The paper focuses on two of them, namely the implications on the real estate market and economic restructuring.