Institutional Arrangement of China's Economy According to the Non-Corner Solutions of Trilemma

The extreme corner solutions of the theory of trilemma is a theoretical result,while various non-corner solutions are better choices for most of countries. In this paper,it is proved that with the exist of capital flow,the optimal coordination of exchange rate policy and monetary policy lie in non-corner solutions. On this basis,an analysis of China's economic growth,capital controls,as well as the effectiveness of monetary policy is conducted. The government ought to look for a balanced point so that comprehensive loss of trilemma could be minimized.