ABSTRACT

With the changed orientation of the macroeconomic adjustment program, the first adjustments were to monetary policy. The impact of employing fiscal policy, increasing government expenditure for the increase of aggregate demand, normally results in the shortage of capital, less opportunity for enterprise investment, or inflation. Relative excess productivity has been a major problem affecting China’s economy in recent years. The current estimated rate of productivity utilization is less than 70%. The fiscal policy in turn will activate the mechanism for the Central Bank to increase the base money supply, and for the banking system to create a monetary mechanism. At present, the government employs a combination of fiscal policy, monetary policy, and investment policy to stimulate the economy. A macroeconomic policy to stimulate the economy has been implemented. We have to adopt certain measures in order to enter into a new economic growth cycle, that is, not just a short-term economic recovery.