By Wang Zhao　

Date: 2002/10/18

Abstract:　

Currently, there is a phenomenon of deflation in China's macro economy, whereas small and medium-sized enterprises are generally facing fund shortages. This paper tries to give an explanation of this phenomenon. As the marginal efficiency with interest rate as the leverage is decreasing, the centtral bank has to pay attention to adjusting ways of thinking when drafting monetary policies. In the short run, monetary policies should stress on variety and flexibility. However, in the long run, financial structural adjustment is inevitable.