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Where Did China’s Newly-Printed Money Go?

A posting on social platform X discussed why the record high of 28 trillion yuan (US$4 trillion) currency that China issued in 2023 didn’t lead to the expect result of boosting economy:

The excess currency, primarily intended to circulate through loans, encountered a lack of demand. Individuals and businesses refrained from borrowing, causing the money to passively flow back, resulting in passive deleveraging. Traditionally, a significant portion of loans flowed into real estate which would drive up development and consumption. But this time the reduced demand (and the dismal projected return) for property purchases and land acquisitions led to idle funds in commercial banks. Consequently, most of the 28 trillion yuan were returned to China’s central bank. The government became the primary borrower, with local governments issuing new city investment bonds to replace old bonds approaching maturity. The total amount of investment bonds issued by city governments in China now exceeds 65 trillion yuan.

Source: Twitter, @TheXiangYang