By Zhang Junwei, Department of Macroeconomic Research, Development Research Center of the State Council (DRC)

Report No 60, 2014 (Total 4559)

Summary:

As China's economy started to change after 2003, it began adjusting fiscal and monetary policies to maintain stable economic operations during various phases of the economic cycle. China finds itself at a critical point going from a medium- to a high-income country, at a time when it is also important to continue reforms in a complex environment while it faces huge macroeconomic challenges.

And the country needs to improve its fiscal and monetary policies in the following ways: make better use of economic information and hold economic performance within a proper range; make monetary policies more independent and flexible; establish a more unified budget system and remove inconsistencies; coordinate fiscal, monetary and related policies; and improve policy design and effectiveness.