While reducing interest rates, the government started to tax interest on deposits and adjusted money supply through central bank open-market operations.

-- From 2004 to 2008, with excessive credit and fixed-asset investment growth and strained supplies of energy and grain, China embarked on a new phase of macro-controls to prevent overheating and inflation. During that period, it modified its stances several times without a fundamental overall change.

The government changed its fiscal policy from "active" to "prudent" in 2005. It continued to pursue a prudent monetary policy till June 2007, when the cabinet proposed a "prudent" but "appropriately tight" monetary policy to counter rising inflationary pressure.

In December 2007, the government decided to adopt a "tight" monetary policy and continue the "prudent" fiscal policy in 2008.

 

Editor:Du Xiaodan