@Kennedy Maina these Americans are just too arrongant. It’s only the U.S that can print money without getting inflation. It’s so cruel and unfair!!!
[SIZE=7]China achieves economic growth by printing more currency?[/SIZE]
New York Times | Updated: May 13, 2014, 05.54 PM IST
https://img.etimg.com/thumb/width-640,height-480,imgsize-95085,resizemode-1,msid-35059040/china-achieves-economic-growth-by-printing-more-currency.jpg
China’s economic growth relies heavily on investment, which means that it requires major injections of capital. [SIZE=5]One of the ways China achieves that is by increasing the money supply - literally, printing more currency (the renminbi, or the yuan, as the unit is more colloquially known).[/SIZE]
“In the past 30 years,” explained a government economist, Wu Xiaoling, in 2011, “we have used excessive money supply to rapidly advance our economy.” At the end of 2013, the excess of money supply totaled 110.65 trillion yuan ($17.77 trillion), four times more than 10 years earlier - a clear sign that the government is printing money faster than the economy is expanding.
Since a floating exchange rate was introduced in 2005, the yuan has consistently risen in value against the United States dollar as China’s economy has grown. But while the yuan has appreciated in relation to other currencies, it has steadily lost value at home. Many ordinary Chinese people are convinced that their money is worth less, and they attribute this to the excess printing of currency by the central bank.
In most economies, such a large surplus of money supply would lead to rampant inflation, but if we look at the rise in China’s Consumer Price Index over the last two years, it’s usually been in the range of 2 to 3 percent, with only occasional spikes. Why has large-scale monetary inflation largely failed to trigger price inflation?
From official quarters, we hear denials that China’s money supply is inflationary. Sheng Songcheng, the head of the central bank’s statistics and analysis department, said in January that the money supply was large because the savings rate and the ratio of indirect financial investment (that is, funding in the form of bank loans) were high. China has one of the highest household savings rates in the world, surging recently to 50 percent of disposable income (although it is a minority of very wealthy households driving the trend).
Economists differ as to what this all means, but one professor of literature has coined a term for it: “the economics of corrupt officialdom.” Corrupt officials, he argues, have a lot to do with the absence of price inflation.
Corrupt officials generally do not spend the huge sums they acquire from kickbacks, and are loath to deposit their money in banks for fear it will be discovered. So they hide their money instead.