China's monetary policy aims to maintain stable prices and promote economic growth. The central bank, People's Bank of China, uses various instruments to achieve these goals, including indirect and direct methods. However, the use of multiple instruments can lead to distortions that hinder the effectiveness of monetary policy. The central bank targets monetary aggregates, domestic loan growth, and the exchange rate as intermediate goals, but controlling these targets can be challenging. Despite difficulties, there is a close relationship between these targets and inflation rates. Additionally, foreign exchange interventions have been profitable for the central bank between 2002 and 2008.