ThinkChina Analysis: Central Bank Independence (CBI) in China – University of Copenhagen

31 May 2019

ThinkChina Analysis: Central Bank Independence (CBI) in China

China has seen significant economic development over the past decades, and is now one of the leading economies in the world, despite being a communist country with socialist market economy. In this paper, Lena Du closely examines the Central Bank of China – People’s Bank of China (PBOC), to explore the status of its political and operational independence. The analysis inspects China’s banking reform to make sense of PBOC’s development history and political arrangement, then deep-dive into the operational aspects of the central bank through examining its monetary measures and a case study of China’s 2016 capital control. This paper will help the reader understand the development of China’s banking sector and its political context, as well as the implications on China’s macro economy.

Key takeaways:

  • Since PBOC is part of the state apparatus, it therefore implements policies according to CCP’s interests and plans
  • The operational independence of PBOC remains partial and temporary; it has not achieved the full independence from the government.
  • The semi-independent status of PBOC can be viewed as a result of a sociological process, and is a rational  adaptation of China’s specific society and history.

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