A compelling case for Chinese monetary easing
– timely and measured monetary accommodation facilitates reform, supports growth, cushions structural adjustment and mitigates financial risk.
by Guonan Ma on 8th October 2014
Despite unmistakable signs of messy but meaningful monetary easing since last May, a puzzling debate is still raging over whether China should persist with painful but eventually rewarding economic reform or ease monetary policy to stabilise short-term growth. The puzzling question is why one should have to make a stark choice between them instead of sensibly combining the two. In my view, a successful Chinese economy needs both structural reforms on the supply side to enhance potential growth, and a nimble monetary policy to fully exploit such potential on the demand side. I discuss below six reasons why China ought to ease its monetary policy stance.
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