Core Insights - The article analyzes the independence of China's monetary policy from both quantity and price perspectives, addressing the applicability of the "trilemma" and "dilemma" concepts [2][5] - It concludes that since 2022, China's quantity-based monetary policy independence has declined, while price-based independence has significantly improved [2][28] - The article suggests that allowing greater fluctuation in the RMB/USD exchange rate can enhance the independence of price-based monetary policy [2][28] Group 1: Monetary Policy Independence - The analysis indicates that controlling the correlation between economic cycles and inflation cycles, along with global common factors, aids in better identifying price-based monetary policy independence [2][28] - Since 2022, China's quantity-based monetary policy independence has decreased, but price-based monetary policy has achieved a significant level of independence [2][28] - The article highlights that the "trilemma" phenomenon in China has shown a central tendency since the Asian financial crisis, suggesting that a moderate relaxation of the RMB/USD exchange rate can enhance price-based monetary policy independence [2][28] Group 2: Impact of Global Monetary Policy - The article discusses the significant spillover effects of U.S. monetary policy on global financial stability, particularly in the context of the COVID-19 pandemic [3] - It notes that while major economies have followed the Fed's lead, China's monetary policy has diverged, indicating a degree of independence [3][28] - The article emphasizes the importance of maintaining monetary policy independence in light of the Fed's interest rate cuts and the potential impacts on global financial markets [3][28] Group 3: Methodology and Contributions - The article constructs indices for both quantity-based and price-based monetary policy independence, improving the measurement of price-based independence by controlling for economic cycle synchronization and common factors [5][28] - It critiques existing literature for primarily focusing on interest rate independence and neglecting the significance of quantity-based monetary policy independence, especially in the context of China's transition [11][28] - The findings suggest that the current state of China's monetary policy independence is influenced by both domestic economic conditions and external shocks [28][29]

Group 1: International Factors Impacting Chinese Long Bond Rates - International factors are increasingly influential in determining China's long bond rates, especially under more open economic conditions[3] - The Bank for International Settlements (BIS) identifies a shift in global liquidity dynamics, with non-bank financial institutions becoming the main players in international capital flows since 2008[10] - The BIS financial condition index (FCI) highlights two key factors: the "level factor" reflecting interest rates and the "risk factor" indicating market risk perceptions[11] Group 2: Recent Trends and Implications - Since 2021, the BIS's "level factor" has risen sharply due to inflation and tightening U.S. monetary policy, indicating a significant tightening of financial conditions[12] - The "risk factor" has shown slight tightening since 2021, impacting China's economic conditions, but this effect is expected to ease as major central banks begin lowering interest rates in Q4 2024[12] - A strong U.S. dollar has a negative correlation with China's 10-year government bond yields, with a correlation coefficient of -0.89 from January 2014 to September 2025, indicating that dollar strength significantly influences bond rates[15]