China's ratio of M2 to GDP rose to 188% of GDP last year--up from 154% in 2002, said by the head of China's Central Bank, Zhou Xiaochuan in a interview with newspapers, which published in newspapers in March 8, 2013.
Why do China have such a High level of Money Supply?
It was caused by high saving rates, said by the head of China's Central Bank, Zhou Xiaochuan.
Let's say China's currency would be pandas instead of Renminbi. Would there suddenly be more pandas because people don't spend their pandas so quickly?
China's money supply is increasing so fast because the Chinese Yuan is loosely pegged to the US Dollar and the US Fed is printing money like there is no tomorrow. If China doesn't want a sudden appreciation of its currency, it has to print money at the same pace - thus the huge money supply.