Structural Monetary Policy Rules Published in Social Sciences in China

Recently, the co-authored paper China’s Structural Monetary Policy Rules: Theoretical Analysis and Empirical Test Based on Medium and Long-term Loans to Manufacturing Industry by Professor Cao Tingqiu from the School of Economics, doctoral student Pang Nianwei, and Researcher Peng Jiangbo from the People’s Bank of China Jinan Branch was published in Issue 1, 2024 of Social Sciences in China. This paper is an achievement of the construction of the fiscal and finance discipline direction of socialist economics with Chinese characteristics at the School of Economics.

Structural monetary policy is a major innovation to traditional monetary theory, an important component of the macroeconomic governance system with Chinese characteristics, and a crucial way to realize the dual functions of monetary policy in aggregate and structure. The paper systematically sorts out the changes in China’s structural monetary policy rules in recent years, and holds that since entering the stage of high-quality development, the importance of China’s structural monetary policy has been significantly enhanced. Its policy positioning has expanded from making up for the imbalance of aggregate monetary policy in the early stage to serving high-quality development, and its policy objectives have shifted from focusing on the accuracy of credit issuance in the early stage to focusing on the structural effects of policies. The paper argues that with the evolution of structural monetary policy rules, its evaluation paradigm should be improved accordingly, and proposes a comprehensive and systematic evaluation of policy effects from the perspective of structural output gap throughout the process.

On this basis, taking the policy of expanding medium and long-term loans to manufacturing industry implemented in China since 2019 as a quasi-natural experiment, incorporating industrial linkages into the analysis framework, and constructing a difference-in-differences (DID) model, the paper tests the effects of structural monetary policy. It finds that the policy promotes manufacturing investment with strong accuracy and produces obvious structural effects; the policy has spillover effects among upstream and downstream enterprises within the manufacturing industry. The spillover effects not only do not significantly affect the realization of the structural effects of the policy, but also strengthen the policy effects and play an accelerator role when the policy acts on downstream industries. This finding is of great significance for China to further optimize the structural monetary policy framework and improve the quality and efficiency of financial services for the real economy.

Professor Cao Tingqiu’s team has long been engaged in research on monetary policy, bank governance, and financial risks. They have long tracked and observed China’s structural monetary policy and established close academic exchanges and cooperation mechanisms with China’s financial regulation and control departments. This paper gives full play to academic and policy advantages, realizes the organic combination of monetary policy theory and macro-control practice, and is the result of years of university-government cooperation.

In recent years, facing the academic frontiers and major national strategic needs, the School of Economics has fully implemented the construction tasks of the Construction Plan for Socialist Economics with Chinese Characteristics and High-quality Development, formulated and implemented work plans such as the Measures for the Construction of Scientific Research and Innovation Teams of the School of Economics, Shandong University, the Measures for the Training of Young Talents of the School of Economics, Shandong University, and the Measures for the Reward of High-level Scientific Research Achievements of the School of Economics, Shandong University, improved the design of scientific research systems, strengthened organized scientific research, and strengthened the orientation of high-level scientific research represented by major platforms, major projects and major achievements, striving to achieve outstanding results in relevant academic fields. In the past three years, teachers of the school have presided over or completed 12 major national-level projects and published more than 30 papers in top academic journals at home and abroad, with continuously improving academic influence. The research on structural monetary policy rules in this paper constitutes a landmark achievement of the construction of the discipline cluster of "Socialist Economics with Chinese Characteristics and High-quality Development" of Shandong University.