Ling Huawei: Trillion Yuan Profit Transfer Shouldn’t Blur Line Between Central Bank and Finance Ministry

Back in 2020, a rather heated debate over whether there should be a monetization of China’s fiscal deficit put a spotlight on policy coordination between the central bank and the finance ministry. Back then, the government announced a 1 trillion yuan ($145 billion) quota for special government bonds to fight the Covid-19 pandemic. Recently, the disclosure of a more than 1 trillion yuan profit transfer made by the People’s Bank of China (PBOC) to the Ministry of Finance once again ignited a relevant discussion.