Chinese Economic Management Framework Stir-Fry

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Ingredients

• Various structural changes
• Monetary tightening
• Fiscal policy
• Local government debt
• Real estate sector
• Regulatory regime
• Shadow fiscal system
• Shadow financial system
• Land transaction revenues
• Moral hazard problem

Instructions

1. In a wok of various structural changes, add monetary tightening and stir until economic fluctuations shift to a difficult-to-cool-down model.
2. Incorporate fiscal policy as the main means to boost demand, due to the ineffectiveness of monetary easing.
3. Sauté local government debt with real estate sector drawbacks to create a highly opaque shadow financial system.
4. Simmer land transaction revenues with a moral hazard problem to form a shadow fiscal system.
5. Stir-fry until a systematic solution to reform the shadow systems emerges, balancing economic stimulation and deleveraging.
6. Serve hot with a side of regulatory reforms for a well-managed economic dish.

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