China Review News (CRN) recently reported that, based on information officially released by China’s central bank, China’s currency supply (M2, a broad indicator to quantify the amount of money in circulation) reached RMB 97.42 trillion yuan (around US$15.53 trillion) by the end of 2012. This number represents an annual increase of 13.8 percent and is two times the Chinese GDP. Based on the current exchange rate, China’s GDP is one third of the U.S. scale, but the Chinese currency’s circulation level has already surpassed the U.S. Experts warned that the extra printed money may introduce potential systemic risks. Last year’s data for China shows that the government was loosening up the currency policies in order to “stabilize growth.” It is expected that China will maintain the current policies for the first half of 2013 and may tighten up in the second half, which typically faces higher inflation pressure.
Source: China Review News, January 11, 2013