Mainland China`s Monetary and Financial Policies: Operational Changes

Abstract

Since the implementation of economic reforms in 1978, Beijing has established various kinds of financial markets and introduced some modern (Western) financial commodities and policy instruments. After the Third Plenum of the Chinese Communist Party`s (CCP`s) Fourteenth Central Committee in 1993 approved the institution of a socialist market economic system, vigorous efforts have been devoted to the marketization, regularization, and modernization of the financial system. Since 1994, the legal reserve ratio, the rediscount rate, and open market operations have gradually been developed into major financial policy instruments. In the course of reforms, the function of the People`s Bank of China (PBOC) as a central bank has been increasingly emphasized since September 1983, but it is not yet a truly independent central bank. This study examines the changes in mainland China`s monetary and financial policies, particularly the PBOC`s role and the foreign exchange control system.