Empirical Analysis Of China Over-supply Of Money Issued

China’s currency has become the super-fat hot issue at home and abroad, since theChinese amount of currency is equal to the half of the global amount after financialcrisis,"money over theory" has become the important issue of public opinion.Thisissue has been the focus of our research direction in national policy, and the corequestion is that if amount of money is more than wo need, if the answer is yes, thenhow much currency is over what we need? Most domestic and abroad methods ofcalculating China’s money supply is based on a hypothesis of over-supply,the articlewill focus on reaching currency supply and based on a single rule perspective for theamount of Chinese currency since the reform and opening up, comparing the moneysupply and the economy demand,then we can get the amount of over-supply.According to Friedman’s monetary perspective of a single rule,I will take a statisticalmeasure of calculating the birth rate, technology growth (instead of using TFP) andthen add three numbers,we could get what our economy’s demand. The final step iscomparative analysis between the rate of economy’s demand and the rate of M2,thesubtract what we want.The result shows that the amount of Chinese currency is actually economic need andthe result also has cyclical phenomenon. On the one hand,as for the development offinancial market,the subtract become more small than before and is also in line withChina’s economic development stage characteristics; on the other hand,can be seen asChina’s financial and monetary market matures, the ratio of money over graduallyreduced. What is more important fact is that our inflation rate remained relatively safeeven we have so much over-supply.It is indicated that China’s currency supply is areclosely related to the special situation of Chinese economy to some extent.