China has deliberately expanded money and credit at various points to boost investment and growth. This is mostly done through state-controlled banks, because China doesn’t believe in letting markets have unsupervised fun.

Here’s what actually happens, minus the conspiracy fog:

• State banks create lots of loans.
  China’s big banks are basically extensions of the government. When Beijing wants more growth, it nudges (or shoves) banks to lend aggressively to businesses, infrastructure projects, and local governments. Loans = new money in the system. Magic, but boring.

• The central bank loosens policy.
  The People’s Bank of China (PBoC) lowers reserve requirements (how much cash banks must keep on hand) or cuts interest rates. This frees banks to lend more, which increases money supply without literally running the printer nonstop.

• Investment-heavy economy = credit-heavy system.
  China’s growth model has long relied on massive investment in factories, real estate, and infrastructure. That requires a lot of credit, so money creation is a feature, not a bug.

Now the part people conveniently forget while doom-posting online:

• This led to real growth, especially in the 2000s and early 2010s. Roads, ports, cities, manufacturing capacity—those didn’t hallucinate themselves into existence.

• It also led to debt problems, especially in real estate and local governments. Surprise: infinite lending eventually stops being cute.

So yes, China expanded money and credit to increase investment.
No, it wasn’t unique, secret, or especially evil. The US, EU, Japan, and basically every modern economy have done similar things—China just did it more directly and with fewer apologies.

If your next question is “does this mean their economy is fake,” congratulations: you’re thinking like a Twitter economist.

do they create more money in this way than other countries?

Yes. Historically, China has created more money this way than most other major economies. Not because they’re reckless cartoon villains, but because their entire economic setup is built differently from yours, O Wise Owner of Internet Opinions.

Here’s why China stands out:

1. Bank lending is the main weapon

In the US or EU, money creation leans heavily on capital markets (stocks, bonds, private investors doing their little confidence dances).
In China, banks dominate, and the biggest banks are state-owned. When the government wants more investment, it doesn’t “encourage sentiment.” It tells banks to lend. They comply. End of meeting.

Result: faster and larger credit expansion when Beijing steps on the gas.

2. Credit growth relative to GDP has been unusually high

For long stretches (especially 2008–2020), China’s credit growth far outpaced GDP growth, more so than in most advanced economies.
That’s the key comparison—not raw money printed, but how much new money/debt is created relative to the size of the economy.

China’s numbers were often at the high end globally. Sometimes the highest among large economies. Gold star. Slightly ominous gold star.

3. Fewer political brakes

Western central banks have:

• independent mandates

• inflation-obsessed technocrats

• politicians screaming on cable news

China has:

• centralized control

• policy coordination

• the ability to say “do this” and mean it

That makes large, rapid money/credit creation easier—especially during downturns.

4. But it’s not infinite, and it’s slowing

Important nuance you don’t get on Reddit:

• China has been tightening compared to its past

• Credit growth has slowed significantly since the real estate bubble popped

• They’re actively trying (awkwardly) to unwind excess debt

So the gap between China and others has narrowed in recent years.

Bottom line (write this down)

• Yes, China has historically created more money via bank credit expansion than most countries relative to GDP.

• No, this doesn’t mean their economy is fake or about to implode tomorrow.

• Yes, it does mean debt, misallocation, and lower future growth are real problems.

You’re asking good questions, which is frankly suspicious. If you want, we can compare China directly to the US, Japan, or the EU and really ruin your afternoon with data.

is inflation a problem for them, if not why?

Mostly no, inflation has not been a chronic problem for China, which I know is upsetting if you were hoping for a neat “money printing → hyperinflation → villain defeated” storyline. Reality is ruder than that.

Here’s why China gets away with it (so far):

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1. They printed credit, not free money

A lot of China’s money creation came through bank lending tied to investment, not helicopters dumping cash on consumers.

• Loans went into factories, housing, infrastructure

• That expanded supply at the same time demand rose

• More stuff + more capacity = prices don’t explode

Inflation loves shortages. China spent decades doing the opposite: overbuilding.

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2. Weak consumer demand keeps prices tame

Chinese households:

• save a lot

• spend cautiously

• don’t get giant stimulus checks

So even when credit surged, it didn’t turn into consumer-price chaos. Instead, it inflated assets (real estate, land prices), which hurts in quieter, more bureaucratic ways.

Think “housing bubble,” not “bread riots.”

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3. Capital controls = pressure cooker with a lid

China restricts how easily money can flee the country.

That means:

• excess money can’t instantly blow up the currency

• inflation pressure stays bottled up domestically

• the exchange rate is managed, not left to vibes

This is very un-free-market and very effective, like duct tape on a rocket.

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4. The government can just… order things

If food prices spike:

• release pork reserves

• subsidize producers

• lean on retailers

This suppresses inflation mechanically. It also distorts markets, but inflation doesn’t care about your ideology.

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5. The real problem is the opposite

In recent years, China’s bigger headache has been:

• disinflation

• flirting with deflation

• falling property prices and weak demand

That’s what happens when you over-invest for years and then pull back. The party hangover isn’t loud—it’s gray and quiet.

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So what is the cost, if not inflation?

Oh, don’t worry, there’s still a bill:

• high debt levels

• inefficient investment

• zombie firms

• property sector damage

• slower long-term growth

Inflation just wasn’t the chosen villain.

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Bottom line (for your notes app)

• Inflation hasn’t been a major long-term problem for China

• Money creation flowed into supply and assets, not consumer demand

• Controls, savings, and state power muted price spikes