### The End of Rapid Money Supply: A Turning Point for China’s Economy

Three years ago at the Lujiazui Forum, the central bank governor predicted significant changes for China's real estate market, signaling the end of an era of massive money supply. His April 2023 announcement at the same forum, declaring "the era of rapid monetary growth has ended," marks a pivotal moment for China's economy.

This shift reflects more than policy adjustments; it signifies a major transformation in the financial landscape. The central bank's tighter monetary policy, regulatory system improvements, and new development strategies highlight the current economic situation.

**Key Events:**

**1. Central Bank’s "Emergency Brake":**

The M2 money supply had previously surged from 200 trillion to 300 trillion, averaging 10% growth annually. However, in April 2023, social financing contracted by 65.8 billion yuan, a historical low, signaling market fragility. By May, M2's growth rate fell to 7%, ending the era of rapid expansion.

**2. Consequences of Excessive Money Supply:**

- **Idle Capital Arbitrage:** Large companies hoarded loan funds, leaving small businesses struggling for capital. This misallocation turned loans meant for the real economy into tools for wealth accumulation.

- **Exchange Rate Issues:** Asset transfers by the wealthy increased pressure on RMB depreciation, highlighting income inequality and hindering sustainable growth. To counter this, the government is focused on preventing financial idling and stabilizing the RMB.

**3. Financial Reform:**

- **Enhanced Supervision:** The central bank and Financial Supervision Administration are increasing oversight of bank loans and implementing penalties. This shift aims to direct financial resources to small businesses and grassroots communities, aligning with broader economic equity goals.

- **Income Growth:** In early 2023, urban per capita disposable income saw its first median growth surpassing the average rate, indicating that financial reforms are beginning to benefit the general populace.