Craig Stephen from MarketWatch is echoing the same view, going one step further to suggest that China’s tap may be running dry:
Now, however, some analysts warn Chinaâ€™s money tap is running dry and this could trigger the next major deflationary shock……..
…… Chinaâ€™s prodigious money supply growth has been the counterpart to its bulging trade surplus. In fact, China has been consistently running both a capital and current account surplus, where, in order to keep it currency value suppressed, it accumulated its $3 trillion plus foreign reserve mountain. This led to vast quantities of new money being created as the central bank printed yuan as it exchanged foreign currency.
The change is now Chinaâ€™s surpluses no longer look as if they can be taken for granted, nor indeed the expectation of continued strength in the yuan.
Via – MarketWatch
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