Dual-Stability Policy – China’s Path to Avoiding the Great Depression

Author: Chen Dongqi et al.
Publisher:
Publish Date: 2005-01-01
Features: In January 2003, the Institute of Economic Research under the National Development and Reform Commission and the Comprehensive Planning Department of the Ministry of Transport established a research team on the Impact of National Macroeconomic Policies and Trends on Transportation Development. In its final report submitted to the Ministry of Transport in November, the team proposed that the policy orientation for the later period of the 10th Five-Year Plan and the 11th Five-Year Plan should follow a dual-prudent approach. The report stated: In line with the new development concept of people-centered, comprehensive, coordinated, and sustainable development, advance all aspects of building a moderately prosperous society in the first decade. In terms of aggregate demand management policies, adhere to the principle of expanding domestic demand, increase investment, consumption demand, and employment, stabilize prices, achieve balance of payments, and promote sustained rapid economic growth. The operational measures should lean more towards prudence and neutrality, avoiding a full-scale contraction or expansion, and seeking flexible and diverse policy combinations between tight and loose policies to embody the dual-prudent spirit. Focus on the regulatory effects to avoid large fluctuations, reduce economic volatility, and strive to break through the growth range of "seven up, eight down" based on improvements in structure, quality, and efficiency, achieving steady progress on a higher growth platform. After proposing the medium-term concept of the dual-prudent policy, we further refined the dual-prudent policy thinking in subsequent short-term analyses of the economic situation and policies, and on this basis established the dual-prudent policy research project. This book is the final outcome of the project research and also presents our systematic approach and understanding of how to effectively implement the dual-prudent policy in the coming years.