Social Sciences in China (Chinese Edition)

No. 1, 2024

China’s Structural Monetary Policy Rules—Theoretical Analysis and Empirical Verification Based on Mid-and Long-Term Loans in Manufacturing Industry

(Abstract)

Cao Tingqiu, Pang Nianwei and Peng Jiangbo

Structural monetary policy is an important component of the macroeconomic governance system with Chinese characteristics. In recent years, its importance has been growing, and policy rules have continued to evolve. Policy positioning has expanded from compensating for the imbalance in aggregate monetary policy in the early stage to serving high-quality development, while the policy goal has changed from focusing on the accuracy of credit delivery in the early stage to focusing on the structural effects of the policy. Treating China’s policy of expanding medium-and long-term loans for manufacturing industry since 2019 as a quasi-natural experiment, we constructed a difference-in-difference model that included industrial correlations and tested the effect of the policy in a full-process and systematic manner. The results show that the policy has had the highly accurate promotional effect on manufacturing  investment and has produced marked structural effects. It has had a spillover effect on upstream and downstream enterprises within manufacturing industry, but the spillover effect has not only failed to significantly affect the realization of the structural effect, but has also been able to strengthen the policy effect and play an accelerator role when the policy acts on downstream industries. Systematically examining the process characteristics and constraints of structural monetary policy is of great significance for optimizing policy design and improving the ability to develop high-quality financial services.