Now, let's get a quick review of terms "proactive" fiscal policy and "prudent" monetary policy.

Proactive policy means expansionary policy. If the fiscal policy is proactive or expansionary, the government usually arranges an amount of deficit. The amount of deficit leads to a decline of fiscal revenue and increase in fiscal expenditure. Due to the decline of fiscal revenue, the government could lower tax burden in some specific industries targetedly, which is helpful on economic restructuring. Meanwhile, the increase in fiscal expenditure could benefit people’s well-being and Infrastructure by providing more capital inflows.

Jia kang, director of Research Institute for Fiscal Science of the Ministry of Finance said: "The opposite of today’s proactive fiscal policy is prudent fiscal policy. When the policy needs to change, to control its expenditure force, then, it is called prudent policy."

Moderately loose, prudent, and tight monetary policy are different in banks’ providing loans. When practicing a loose monetary policy, it is easier to get loans, and the interest rate is rather low.

Jia said: "A prudent monetary policy is not expansionary and is moderately tightened. Moderately tightened policy is tightened in credit controlling, with strict financing, and vice versa."

Experts say the combination of fiscal policy and monetary policy was closely related to the economic fluctuation.

Jia said: "By the end of 2010, the deflation pressure became inflation pressure. So the moderately loose monetary policy was changed to prudent policy. However, it was not necessary to change the fiscal policy, which is still proactive. "

Jia Kang adds that this policy combination is expected to be kept for a period of time.