China increase 67% mi Money supply it impacts nagative. ? China’s decision to increase its cash supply by 67% in just one month, reaching $6.76 trillion, raises serious concerns about the state of its economy. Such a massive liquidity injection suggests that the Chinese government is attempting to cover a growing economic hole, likely caused by a combination of structural weaknesses, financial instability, and declining growth.
One of the major factors behind this move is China’s struggling real estate sector, which has been in crisis since the collapse of major developers like Evergrande and Country Garden. The sector, which once contributed nearly 30% to China’s GDP, is now facing a liquidity crunch, falling property prices, and a loss of investor confidence. Additionally, declining consumer demand and a slowdown in industrial production have further weakened economic growth. The rise in local government debt, which is estimated to be in the trillions, has also put pressure on policymakers to inject liquidity into the system.
However, such an aggressive expansion of cash supply comes with risks. Increasing money supply at such a rapid pace can lead to inflationary pressures and potential devaluation of the Chinese yuan. If confidence in China’s financial stability erodes, it could lead to capital outflows, further straining the economy. From a global perspective, this move signals economic distress and could negatively impact worldwide markets. Investors may become cautious about China’s financial health, leading to reduced foreign investments and market volatility.
Overall, China’s sudden cash injection is a sign of deeper economic troubles rather than a sign of strength. While it may provide short-term relief, the long-term consequences could include inflation, financial instability, and a ripple effect on global markets. This move suggests that China may be bracing for a significant economic downturn in the near future.
