China also made raising the level of social protection a priority in its new Five-Year Plan. Solid monetary policy framework The second piece, which is very relevant to central bankers, is a solid monetary policy framework to provide the foundation for sustainable growth.
China faces what is known in international economics as the “policy trilemma.” 14 No country can sustainably maintain all of the following three policies: (i) a fixed exchange rate, (ii) independent monetary policy and (iii) free international capital flows. It’s the classic case of “you can’t have it all.” Resolving this trilemma won’t be easy, and it takes time.