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According to Chinese media, as of the end of 2012,
global new money supply surpassed RMB26 trillion, with China accounting for nearly half of it.
China’s M2 has reached 100 trillion, the highest in the world,
and set a record high again on the ratio of currency and GDP.
What is the reason for the proliferation of Chinese currency?
21st Century Network data show that since 2009,
money supply of China’s central bank has surpassed that of Japan, U.S., and the Eurozone.
China has become the world’s largest
money printing machine.
World’s new money supply in 2012 was over RMB26 trillion,
and nearly half of it was from China.
In addition, China’s central bank data shows that at the end
of 2012, the balance of China’s money supply (M2) reached RMB97.42 trillion, the highest in the world.
This was nearly a quarter of the total global money supply,
1.5 times of the U.S. supply, and surpassing that of the Eurozone and UK combined.
Professor Xie Tian from the University of South Carolina’
Aiken Business School commented on the issue.
Prof. Xie said, the Chinese Communist Party (CCP)
does not resist inflation, facing its regime crisis.
It continues to issue money to maintain the abnormal growth
of the economy, leading to greater inflation.
Prof. Xie: “From the perspective of maintaining power and
safeguarding stability, the dangers from the unemployed is more direct, more prominent and more obvious than inflation.
So it maintains power by high GDP
and reducing unemployment.”
Researcher at China Finance Think-Tank, Gong Shengli
points out that China’s GDP is about 1/3 of the U.S.’, but its money supply is four times that of the U.S.
Gong Shengli: “The quality of Chinese currency operation
is very low. For example, in the U.S. yields – in investments. In China, it only produces .3.”
Gong Shengli further pointed out there are three main
reasons for the poor quality of the Chinese currency.
Firstly, China’s expenditure includes not only the normal
government expenses, but those of the huge CCP system too.
Starting from the Young Pioneers to the countless CCP
branches, plus the women’s unions, industry and commerce associations, the writers associations, etc.
Secondly, other countries only have three-level hierarchy,
while the Chinese government is a seven-layer hierarchy, resulting in huge governmental structure and expenses.
In addition, Chinese officials at all levels like to place
their family and friends in state monopolies, like water, electricity, coal, gas, land, etc. enterprises.
This results in particularly high energy costs in China.
Gong Shengli: “Hunan Shaoyang is a third level city.
Its water treatment plant should have about 200-300 people.
Since it is state-owned, officials’ children were put in there.
So this water place has over one thousand employees.
The same applies for all state-owned monopoly enterprises.
The cost is inevitably high.
Where do these money come from?
It can only issue new money.”
Gong Shengli also said that China is not a market economy,
and its currency is controlled by the CCP.
There is no base for currency supply and growth.
It also does not have the management system
of a market economy like other countries ruled by a law.
Therefore, China’s currency is a mess.
Gong Shengli: “In the first half of 2012 many places
were short of money, including the local governments.
What could they do?
They have to issue money.
Chinese currency’ issue should be fixed based on the market
economy rules, otherwise it will only result in inflation.”
Xie Tian: “The privileged class can always benefit by ultra-
issued currency, expanded scale of infrastructure and loans.
Their income will far exceed the pace of inflation.
That’s why we say ultra-issued currency is the fastest
and most shameless way to rob the Chinese people.”
21st Century Business Herald comments that with China’s
money supply (M2) close to 100 trillion in 2012,
and annual GDP of 50 trillion, it has set another record
of M2 and GDP ratio, which measures currency supply.
The report said, this is a dangerous sign.