January 2021
IMF Country Report No. 21/12
PEOPLE'S REPUBLIC OF CHINA
SELECTED ISSUES
This paper on the People's Republic of China was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed on December 2, 2020.
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PEOPLE'S REPUBLIC OF CHINA | ||||
SELECTED ISSUES | ||||
December 2, 2020 | ||||
Approved By | ||||
Prepared by a team led by Helge Berger, with individual | ||||
Asia and Pacific | chapters authored by Fei Han, Emilia Jurzyk, Sarwat Jahan, | |||
Department | Cian Ruane, Caroline Zhou (All APD), Sonali Das (RES), Henry | |||
Hoyle (MCM), Grace Li (FAD), Phakawa Jeasakul (Resident | ||||
Representative in Hong Kong SAR), Wenting Song (APD | ||||
Summer Intern), and Wei Guo (SPR). |
CONTENTS
FURTHER STEPS TO IMPROVE MONETARY POLICY EFFECTIVENESS AND CREDIT
ALLOCATION _________________________________________________________________________ 3
A. The Role of Interest Rate Guidance Policies __________________________________________3
B. Interest Rate Guidance Policies and Credit Allocation ________________________________4
C. Interest Rate Guidance Policies and Monetary Policy Transmission __________________6
D. Advantages of Interest Rate Guidance Policy Reform ________________________________7
CHINESE STATE-OWNED ENTERPRISES, RESOURCE (MIS)ALLOCATION, AND
PRODUCTIVITY _______________________________________________________________________ 9
A. A Brief Overview of SOEs in China ___________________________________________________9
B. Productivity Gaps Between Listed SOEs and POEs__________________________________ 10
C. The Role of Credit Misallocation ___________________________________________________ 13
D. Policies to Reform Chinese SOEs___________________________________________________ 14
References____________________________________________________________________________ 16
CONVENTIONAL MONETARY POLICY TRANSMISSION AND POLICY
COORDINATION IN CHINA _________________________________________________________ 18
A. An Evolving Policy Framework _____________________________________________________ 18
B. Monetary Policy Shocks ____________________________________________________________ 19
C. Monetary-Fiscal Coordination _____________________________________________________ 20
D. Empirical Specification and Results ________________________________________________ 21
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PEOPLE'S REPUBLIC OF CHINA
E. Policy Implications _________________________________________________________________________ 24
References____________________________________________________________________________________ 25
INTERGOVERNMENTAL COORDINATION IN CHINA: HOW MUCH FISCAL RISK SHARING IS THERE AND CAN IT BE IMPROVED? _____________________________________________________ 26
A. Introduction: Local Government Financing Amid COVID-19 _______________________________ 26
B. Empirical Strategy and Results _____________________________________________________________ 27
C. Considerations for Reform _________________________________________________________________ 31
References____________________________________________________________________________________ 33
2INTERNATIONAL MONETARY FUND
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