Monetary policy is an important means of macroeconomic management in China  Monetary policy is one of the important means through which China manages the economy. Its effect is transmitted through the financial system, the core of a modern economy. The effect of monetary policy is not limited to one sector or one area.
More broadly, it is felt in every part of the economy and affects individual economic behaviors at the micro-level. In this sense, monetary policy carries more system-wide implications and is more systemically important than exchange rate target. Monetary policy flexibility and effectiveness are particularly important under China’s unique circumstances.