Growth of Broad Money in India Outpaced China Since 2017

(Broad Money: China (M2, Chinese Yuan) - India (M3, Indian Rupee], Annual Growth)

China played a dominant role in the global money supply growth over the last two decades, propelled by robust economic expansion, capital formation, and manufactured exports. China's economy experienced an annual growth rate of 8.4% between 2000 and 2022, in contrast to approximately 3% for the rest of the world excluding China. During the same period, China's manufacturing exports rose by 13.1% annually, while the rest of the world experienced a growth rate of 4.7%. Additionally, China's inflation rate was slightly more than half of the global average.

In 2022, China's 30.7% share of the global money supply mirrored its significant footprint in the global economy, as evidenced by its 28.9% share in gross capital formation, 30.5% in manufacturing value added, and 28.2% in manufacturing exports.

The growth of broad money in India has outpaced that of China since 2017. Between 2000 and 2016, broad money experienced an average annual growth rate (CAGR) of 16.4% in China, compared to 14.3% in India. However, from 2016 to 2023, China's broad money grew at an average annual rate (CAGR) of 9.5%, which was 10.5% less than that of India. Given India's growing demand for economic expansion, there is an increasing need for a larger money supply. Consequently, it is anticipated that money supply in India will continue to grow at a faster pace in the future.

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