May 16, 2023 08:29 PM
OPINION
Opinion: China’s Fast Monetary Expansion but Low Inflation: Why the Divergence?
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The greater the demand for money, the more likely it is to boost the economy and prices. But if the demand for money decreases, even faster growth in the supply may not achieve the desired effect. Photo: The Paper
China’s M2 money supply grew 12.7% year-on-year at the end of March, up 3 percentage points from a year earlier and marking its second-highest rate since April 2016. In contrast, the consumer price index rose just 0.7% year-on-year in March, a 0.3 percentage point decline from the previous month, while the producer price index fell 2.5%, expanding its decline by 1.1 percentage points from February.
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