I came across this article that I thought informational and interesting. It is saying that China's M2 money supply is increasing at 12.8% in August yoy. It is still considered as "stable" and "sustainable".
Now look at the above two graphs. From Sept 2013 to Aug 2014, the M2 market for China drastically increased( if you can't see, it is from 108 trillion RMB to 121 trillion RMB; conversion rate to USD is around 6RMB= 1USD) by 12%. US M2 market is only increasing from 10.8 trillion dollars to 11.5 trillion dollars, where the rate of growth is 6.4%.
M2 level is a measure of total money in the economy, including the most liquid cash (M1) and checks, and less liquid capital such as money market mutual funds, and saving deposit.
With this in mind that money demand in China grows much faster than the US, this may reflect the China's warm investment atmosphere and business prosperity. Capital outflow is still having low pressure. US GDP is roughly twice as large as China's, but Chinese M2 market is larger than the US. It means the investment is the unique driving force for China. In this regards, Chinese economic growth outpace the US and will last in the long run.
- Zhipeng
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