Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By The Epoch Times - China
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

China’s Money Supply Sees Dramatic Increase

% of readers think this story is Fact. Add your two cents.


Beijing’s Central Business District made from Chinese yuan notes, in 2007. Economists say that the excessive printing of money in China has led to inflation, which the regime attempts to conceal. (Teh Eng Koon/AFP/Getty Images)

 A measure for Chinese money supply surpassed 94.37 trillion yuan (US$15 trillion), twice the country’s gross domestic product, this year. Given the aggressive growth, experts have begun suspecting that it will have an impact on inflation, and other economic consequences.

The latest data released by the People’s Bank of China—the country’s central bank—indicates that the broad money supply (known as M2) stands at 94.37 trillion yuan, which shows growth exceeding 14 percent for the first time this year, according to Caijing, a well-known financial publication. M2 is measured by taking into account notes and coins in circulation, as well as financial instruments such as checking accounts and deposits.

Economists generally understand that high levels of credit growth indicate lax monetary policy, and can lead to inflation.

At the same time, a more narrow measure of money supply, (M1), is at 28.68 trillion yuan, which is a 7.3 percent year-on-year growth, and an increase of 2.8 percent compared to the end of last month.

Economists sometimes decide whether there is too much money in a system by using the ratio between money supply and GDP. In developed economies in the West, the ratio between M2 and GDP is below one. In emerging market countries, M2 is usually 1 to 1.5 times GPD.

China’s M2 at the end of September this year stood at double GDP, based on a GDP value of 47 trillion yuan (US$7.5 trillion) for 2011, according to the Chinese Bureau of Statistics.

Even if the comparison is made to the recorded M2 of $10.12 trillion for the United States, Chinese M2 stands at 1.5 times higher than that of the United States. On the contrary, Chinese GDP is only half of that of the United States, based on 2011 IMF numbers.

However, Zhou Xiaochuan, president of the People’s Bank of China believes that the amount of currency in circulation is not adequate. In the ninth issue of the Journal of Financial Research, Zhou claims that China did not print and put in circulation excessive currency, as widely reported by Chinese media.

Currency in circulation represent notes and coins and is a part of commercial banks’ reserves. It is the so-called, high-powered money without which there cannot be growth in credit and M2.

Frank Xie, who writes regularly about China’s economy, said in an interview with The Epoch Times that Zhou Xiaochuan’s argument is pushing responsibility away from the Chinese regime for printing money.

“Look at China’s real inflation statistics, don’t look at the numbers published by the Communist Party. Look at numbers provided by independent research institutions outside China. In reality the official inflation statistics over the past couple of years can only be caused by excessive printing of money, there is no other cause.”

Xie said that since China’s economy is currently in decline, lowering interest rates has limited effect on stimulating the economy because the country is not yet a properly functioning market economy: the Communist Party depends primarily on printing money to stimulate the economy, he said.

“People are really feeling the effects of rising prices, yet CPI statistics published by the Party continue to decline, and the outside world cannot grasp how these statistics come out,” Xie said. Hiding the true picture of inflation behind manipulated statistics is a useful cover for printing money, he argued.

Another often overlooked measure that signals inflationary danger is the size of a central bank’s balance sheet. The PBOC’s balance sheet at the end of June 2012 was 28.6 trillion yuan (US$4.6 trillion). This is bigger than the balance sheets of the Federal Reserve ($2.8 trillion) and the European Central Bank ($4 trillion), but China’s GDP is less than half of either.

As a result, in the past couple of years prices in China have risen rapidly. According to statistical data, the price of beef tripled or even quintupled in some areas within one year.

The price of cooking oil has experienced three waves of increased pricing this year, with a more than 20 percent increase in September, according to the state-run media China News.

Rent in Beijing has increased 20 percent this year, according to Xinhua, the state mouthpiece. China’s real-estate bubble has been a rallying point for skeptics on the country’s economy, and many wealthy Chinese regularly look to poach properties abroad.

Read original Chinese article.

[email protected]

The Epoch Times publishes in 35 countries and in 19 languages. Subscribe to our e-newsletter.


Click www.ept.ms/ccp-crisis to read about the most recent developments in the ongoing crisis within the Chinese communist regime. In this special topic, we provide readers with the necessary context to understand the situation. Get the RSS feed. Who are the Major Players?


Source:


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.