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China and Usa: a Comparison of Their Monetary Policies

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China and Usa: a Comparison of Their Monetary Policies
University of International Business and Economics

China and USA: A comparison of their Monetary Policies.

Mid-term Project
School of International Trade and Economics

BY
Rebecca Bogiri
Professor: LIN GUIJIN

Beijing, China
2 December 2009

China and USA: A comparison of their Monetary Policies.

By: Rebecca Bogiri

December 2009

Abstract

The monetary policies of USA and China is analyzed here from the perspective of their implementing bodies, their choice of instruments, and their means of setting their interest rates. The analysis reveals that there are immense differences between the two countries resulting from the nature and degree of influence from their respective domestic political systems. The paper concludes that China has a complex political economy that represents a hybrid of private ownership and state control. Therefore unlike the USA, its monetary policies are subject to political influence.

Keywords: Monetary policy; Monetary policy instruments; Balance Sheet; China; USA

Author’s email: becky.bogiri@gmail.com

Contents Page

Abstract ………………………………………………………………………………….. 1

Introduction ……………………………………………………………………………… 3

USA Monetary Policy ……………………………………………………………………. 3

China Monetary Policy ………………………………………………………………….. 7

Comparison of China and USA’s monetary policies …………………………………… 9

Conclusion ………………………………………………………………………………. 10

References ……………………………………………………………………………….. 11

1. Introduction

Monetary Policy is the process by which the government, central bank, or monetary authority of a country controls (1) the supply of money, (2) the availability of money, and (3) the interest rate, in order to attain a set of objectives oriented towards the growth and stability of the economy.

This paper refers the above theme to two countries: China and USA. As such, there are three broad objectives. The first is to discuss monetary policy generally as carried out in the USA. The second


References: [2] 2006 [3] China close up (2008)
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