Question

Please paraphrase this writing and fix them as possible as you can. thanks!

According to the article, the modernization of monetary is the best plan in China is the monetary policy. Because China monetary policy is relying on the inflow of foreign cash to generate new money, and it also focuses on the quantity of money. Yes, they focus on the amount of money instead of the price of money. This action showed that China relies on the inflow of foreign cash to generate their new money. Massive quantities of yuan will reduce the money supply of this country. These features are bringing China closer to the developed markets. It can help China to be more flexible to the complex economy. The US has been growing the world's most enormous deficit burden, while China has been running with the world's greatest budget surplus. China is taking step by step approach to this country monetary policy. One of the most important to China economy is the interest rates. Interest rates were used to be the secondary importance of this country. The central banks have their mark to decide how much people can lend and borrow. The central banks can control their lending and deposit rates easily. Before, they had to rely on the government to make a final economic decision instead of the interaction between consumers and businesses. This was like fiscal policy, which means everything is taking control by the government. So that's why this change in the policy can be an essential step for China to move from the planned economy to the market economy. But, this change has their disadvantage. Because the financial system is getting more complex, these changes are hard for the banks to control their loaning and deposit. "With the emergence of a large bond market, myriad non-bank lenders and new investment options for savers, banks now face more competition for deposits and in building up their loan books." Moreover, the interest rates and the bond prices are inversely related.

Answer 1

China is modernizing it's economy through monetary policy and it relies on cash inflow of foreign money in order to generate it's new money/currency also it is focusing on quantities of its currency rather than price of money.

In order to generate it's new currency they are relying on inflow of foreign money and first it is making China's financial system sound because whatever new yuan/money they are generating it is backed by foreign money and it saves it's economy/financial system to fail because in order to pay for the impors it is necessary to have foreign money cash reserves. In order to have more and more foreign money and pay for China's imports, China will buy Yuan and it will reduce money supply of Yuan in China.

This will proximate China's economy to developed economies which are more market related than controlled and this has helped China to become more and more flexible than complex economy.

China/China's central bank is using interest rate as a tool to control money supply in its economy and in order to decide how much people can lend and borrow.

Earlier China's Central bank was dependent on its government to decide it's move in the economy and everything was controlled by government, i.e. money supply in the market of both local currency (Yuan) and inflow of foreign money and it was accordingly deciding it's export competitiveness and import volume and foreign currency reserves.

It was like to be dependent on government's fiscal policy for every revenue and expenditure decision.

So move from government controlled economy to market driven economy based on consumer and free market forces will make it mature economy and saves itself from sudden market changes since it will give China's economy to correct/adjust itself from any type of market changes without any government interference.

But above move has also disadvantages too because of competition from bond market/other than bank system/other than banking lenders.

Since borrowers can borrow money from bond market by issuing bonds as well as savers can invest money in bond market and this will put stress on banks for deposit needs and money to lend and bonds rates are inversely related to interest rates, when banks interest rates are low then bonds yields are increased, for example if one buys bonds for USD 2000 with interest rate/coupon rate of 8% then one get USD 160 as an interest for one year, suppose banks interest rates falls than prevailing market level then yields for bonds gets increased and this is how banks interest rates and bond prices/yields are inversely related.