‘Quantitative Easing with Chinese Characteristics’: How to Fund an Economic Miracle

Human Wrongs Watch By Ellen Brown | Web of Debt – TRANSCEND Media Service*

China went from one of the poorest countries in the world to global economic powerhouse in a mere four decades.

Currently featured in the news is DeepSeek, the free, open source A.I. built by innovative Chinese entrepreneurs which just pricked the massive U.S. A.I. bubble.

Even more impressive, however, is the infrastructure China has built, including 26,000 miles of high speed rail, the world’s largest hydroelectric power station, the longest sea-crossing bridge in the world, 100,000 miles of expressway, the world’s first commercial magnetic levitation train, the world’s largest urban metro network, seven of the world’s 10 busiest ports, and solar and wind power generation accounting for over 35% of global renewable energy capacity.

Topping the list is the Belt and Road Initiative, an infrastructure development program involving 140 countries, through which China has invested in ports, railways, highways and energy projects worldwide.

All that takes money. Where did it come from? Numerous funding sources are named in mainstream references, but the one explored here is a rarely mentioned form of quantitative easing — the central bank just “prints the money.” (That’s the term often used, though printing presses aren’t necessarily involved.)

From 1996 to 2024, the Chinese national money supply increased by a factor of more than 53 or 5300% — from 5.84 billion to 314 billion Chinese yuan (CNY) [see charts below]. How did that happen?

Exporters brought the foreign currencies (largely U.S. dollars) they received for their goods to their local banks and traded them for the CNY needed to pay their workers and suppliers.

The central bank —the Public Bank of China or PBOC — printed CNY and traded them for the foreign currencies, then kept the foreign currencies as reserves, effectively doubling the national export revenue.

Investopedia confirms that policy, stating:

One major task of the Chinese central bank, the PBOC, is to absorb the large inflows of foreign capital from China’s trade surplus. The PBOC purchases foreign currency from exporters and issues that currency in local yuan. 

The PBOC is free to publish any amount of local currency and have it exchanged for forex. … The PBOC can print yuan as needed …. [Emphasis added.]

Interestingly, that huge 5300% explosion in local CNY did not trigger runaway inflation. In fact China’s consumer inflation rate, which was as high as 24% in 1994, leveled out after that and averaged 2.5% per year from 1996 to 2023.

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2025 Human Wrongs Watch