Chinese Economic Reform: The Current Central Bank Monetary Policy - Coursework Example

The introduction of the reforms in 1978 allowed China to be a part of the few countries that we're quickly heading towards economies that were growing rapidly. It is also ahead in the field of exporting as well as importing of goods. According to statistics, the rate of poverty has fallen down since 1981 till 2005 from 40 percent to 29 percent (The World Bank, 2008) and that is due to their industrialization sector. But now today, there seems to be a major problem with the ever-growing population and inflation. The income of the rural-urban sectors seems to be dwindling and that indeed is a problem that needs to be dealt with.
So, my motivation behind selecting this topic is to prepare a report about the inflation crisis in China and also how the monetary bank with their policy is going to control it. Therefore, that is my research question also,
“Chinese economic reform, the current central bank monetary policy and how this policy controls the inflation”
My objective in writing this report is to present with a discussion concerning inflation and what it is. Specifically, inflation in China will be considered and also the policies that the Chinese officials have undertaken in order to control it.
I would also like to introduce the term inflation briefly and then further in chapter 2 I will explain it in detail. In February since the last 11 years, the rate at which China’s inflation grew was tremendous but not in a good way. Due to this everything turned upside down; it added immense pressure on the Chinese government to come up with plans to hold or slow down the economy and for the central bank to make an increase in their interest rates. One can say that China has sealed its own economic doom but I am hopeful that with these policies the inflation will be under control.
In the coming chapters, I will be discussing in length the 1979 economic reform background, the government policies, inflation situations, economic theory, bank of China, central bank monetary policies, literature reviews of China’s rapid growth.