I. IntroductionBeginning in the early 1980’s short-run macro policy in China moved away from direct government control of household and enterprise spending via largely administrative decree to more indirect control of spending using conventional western monetary and fiscal policy instruments operating in an increasingly, although never completely, free and well-developed market setting. The initial theoretical basis for macro policy-making is best described as naive Monetarism, placing almost exclusive emphasis on monetary as opposed to I. Introduction Beginning in the early 1980’s short-run macro policy in China moved away from direct government control of household and enterprise spending via largely administrative decree to more indirect control of spending using traditional western monetary and fiscal policy instruments operating in an increasingly, yet completely, free and well-developed market setting. The initial theoretical basis for macro policy-making is best described as naive Monetarism, placed almost exclusive emphasis on monetary as opposed to