China’s Multi-Objective Monetary Policy Framework: Institutional Coordination, Credit Allocation, and Open-Economy Mechanisms

Using comparative institutional analysis, this study examines China’s multi-objective monetary policy framework. The evidence combines official legal and policy documents with descriptive macroeconomic and sectoral data, and the comparison uses a price-stability-oriented benchmark associated with the New Neoclassical Synthesis (NNS). The People’s Bank of China operates under State Council leadership but retains legally defined authority over policy implementation. Its statutory objective is to maintain currency stability and thereby promote economic growth. Employment, financial stability, financing conditions, and the external balance also enter policy coordination. China employs many interest-rate and liquidity-management instruments common to modern central banking, yet its hierarchy of policy objectives, decision-making arrangements, coordination mechanisms, and structural credit support differ from the benchmark. The analysis is organized around two complementary mechanisms. Investment-oriented financing can support current demand and productive capacity. External demand absorbs part of domestic output, while export-related foreign-exchange transactions interact with the banking system and official reserve management. By linking institutional authority and policy objectives to financing uses, investment, and open-economy arrangements, the paper extends existing accounts of China’s monetary policy framework beyond operational modernization alone.