- A cross-cyclical approach means taking action sooner, in smaller steps, and with a longer time frame in mind
- It is a departure from countercyclical policy, which is when central banks and governments add stimulus to spur a slowing economy
Officials have not outlined what cross-cyclical policy entails, but several economists with links to the government say the objective is to take action that is pre-emptive and moderate to smooth out fluctuations in growth says an article on SCMP.
Cross-cyclical approach
The Chinese Communist Party has a new catchphrase to guide its economic policy, a so-called cross-cyclical approach that government advisers say means taking action sooner, in smaller steps, and with a longer time frame in mind.
Countercyclical policy
It is a departure from countercyclical policy, which is when central banks and governments add stimulus to spur a slowing economy – like cutting interest rates or taxes and boosting infrastructure investment – and tighten when growth starts accelerating.
Objective
Officials have not outlined what cross-cyclical policy entails, but several economists with links to the government say the objective is to take action that is pre-emptive and moderate to smooth out fluctuations in growth.
Restrictions in some areas
It implies keeping restrictions in place in some areas while easing up in others. That was highlighted recently by the central bank cutting the reserve requirement ratio (RRR) for banks to boost liquidity, but tightening property restrictions to rein in prices. But what can be expected from the policy shift?
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Source: SCMP
