The Choice Of Macroeconomic Policies In New Urbanization

In 2011, China’s urbanization rate exceeded 50% for the first time, and reached 51.3%, which means that China’s urban population exceeded the rural population and urbanization in China has entered a critical stage of development. The 18th National Congress of the Communist Party of China (CPC) has written "urbanization" into government reports, together with new industrialization, modernization of agriculture, information technology, which has become the future direction of China’s development. Urbanization is the focus of reform which the new government is undertaking. The CPC Central Committee Political Bureau held economic conference and was clear that urbanization should adhere to the overall tone of "maintaining stability".Besides, the reform should throughout all areas and aspects of economic and social development. Urbanization is a system problem in essence which requires the government to proceed the supporting reform. Thus, with China’s urbanization under the guidance of national macroeconomic policies, there will be inevitably an impact on all aspects of economic and social development of our country at the same time.In order to analyze the impact of new urbanization on the macroeconomic system and to clarify the interaction mechanism of urbanization strategies and macroeconomic policies,firstly, this paper considered that the factors of rural labor and capital were transferred and gathered to the city, expanded the traditional Keynesian IS-LM-PC model theory from the perspective of urbanization, government investment subsidies and non-tax revenue; Secondly, the SVAR model was founded based on sample data from 1980-2011 in order to study the match of macroeconomic policies on macroeconomic control. The results show that:urbanization has a dual effect for China’s macroeconomic; it results in a decrease of inflation rate while promoting economic growth, that is, in the process of urbanization, China’s economy does not exist "the slope puzzle"; in the long term, playing an active role of urbanization in restraining the demand for real money growth is conducive to the transition of China’s monetary policy from the quantitative regulation to price regulation; in the short term, making a positive and flexible use of monetary policy of quantitative and price regulation to regulate and control market expectations, consumer behavior of economic entity and corporate investment activities to achieve a steady and rapid development of macroeconomics.