China how much money

Personal Finance. Your Practice. Popular Courses. Economy Fiscal Policy. Table of Contents Expand. Understanding Money Supply.

The Traditional Chinese Economy. Changes in the Last Decade. How China Controls Money Supply. The Bottom Line. Because of its unique export-dependent economic system, China's money supply policies vary from methods used by other nations.

Two ways China manages its money supply is by controlling forex rates and printing currency. The PBOC can also control the money supply by changing the reserve ratio and the discount rate. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Federal Reserve What happens if the Federal Reserve lowers the reserve ratio? Debt With Treasury Bonds. Federal Reserve Fiscal Policy vs.

Monetary Policy: Pros and Cons. Most Chinese loans have helped finance large-scale investments in infrastructure, energy, and mining. We also show that China tends to lend at market terms, meaning at interest rates that are close to those in private capital markets.

Other official entities, such as the World Bank, typically lend at concessional, below-market interest rates, and longer maturities. In addition, many Chinese loans are backed by collateral, meaning that debt repayments are secured by revenues, such as those coming from commodity exports. In the s and s, when it lent money to other Communist states, China accounted for a small share of world GDP, so the lending had little or no impact on the pattern of global capital flows.

Today, Chinese lending is substantial across the globe. The last comparable surge in state-driven capital outflows was the U. Very little came at market terms and with strings attached such as collateral. Assessing repayment burdens and financial risks requires detailed knowledge on all outstanding debt instruments. Second, the private sector will misprice debt contracts, such as sovereign bonds, if it fails to grasp the true scope of debts that a government owes.

This problem is aggravated by the fact that many Chinese official loans have collateral clauses, so that China may be treated preferentially in case of repayment problems. As a result, private investors and other competing creditors may underestimate the risk of default on their claims.

And, third, forecasters of global economic activity who are unaware of surges and stops of Chinese lending miss an important swing factor influencing aggregate global demand. On the other hand, if China called in its debt, the demand for the dollar could plummet. This dollar collapse could disrupt international markets even more than the financial crisis. China's economy would suffer along with everyone else's. If China ever did call in its debt, it slowly would begin selling off its Treasury holdings.

Even at a slow pace, dollar demand would drop. At some price point, U. China could start this process only after it further expanded its exports to other Asian countries and increased domestic demand. China's low-cost competitive strategy seems to be working. In , it grew at 6. China has become one of the largest economies in the world.

China also became the world's biggest exporter in China needs this growth to raise its low standard of living. For these reasons, we'll likely see China remain one of the world's largest holders of U.

Hilarey is an associate editorial director for The Balance and has held full-time and freelance roles at a variety of financial media companies including realtor. Department of the Treasury. The World Bank. Actively scan device characteristics for identification.

Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. At a G7 meeting in June, the US and its allies announced the G7 adopts spending plan to rival China's influence , which promises to fund global infrastructure projects that are financially and environmentally sustainable. However, the plan might simply have come along too late. Also, working with Western official financiers is bureaucratic and subject to long delays.

The AidData researchers found that the Belt and Road project is facing its own issues. BRI projects were more likely to be associated with corruption, labour scandals or environmental issues than other Chinese development deals.

In order to keep the BRI on track, researchers say, Beijing will have no choice but to address borrowers' concerns. China's secret aid empire uncovered. Is China burdening Africa with debt? G7 adopts spending plan to rival China's influence. Workers in Jiangsu province, seen here producing equipment for export along China's Belt and Road. The Yumo railway will link China and Laos - but experts say Laos will struggle to pay back the debt.

Image source, EPA.