China's Monetary Policy: Too Tight?

The prudent monetary policy with Chinese characteristics has taken shape step by step since the beginning of 1998. The background for the formation of the policy was: (1) financial risk problem was extraordinarily outstanding and the pressing task at the time was to prevent and reduce financial risks; (2) a turning-point change occurred in the market supply and demand, with structural conflicts becoming the main contradictions and the effective demand for loans was inadequate; (3) a proactive fiscal policy was implemented, with the central finance issuing bonds to commercial banks, which meant the use of monetary policy to sustain