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I am not so sure it would. The base unit is the dollar if they stop printing the supply of money measured in dollars would still be high and the only way it would come down is if they paid their debt.
Whatever the stock of Yuan is, appreciation means that stock of Yuan can buy more dollars (assuming the dollar's value is stable).
That is a major assumption!
I'm just trying to avoid the case where the Yuan appreciates against stuff but not against the dollar, which would actually require the dollar to be appreciating more than this hypothetical Yuan.
It is an interesting thought experiment. But I think this chart is showing China’s battle to stop deflation.
If they stopped printing and the Yuan got hardened the demand float would remain constrained due to the CCPs cap controls. But every time they needed dollars to do a trade the demand for dollars goes up thus dollar appreciation.
They need to paper over their mistakes plus a chart like this kills the argument that the trade surplus of over $1T is somehow improving their monetary policy.
This chart shows that the value of all Yuan is increasing in dollar terms.
To me, that would suggest their policies are working better than the US's.
If that were true wouldn’t China have the largest GDP in the world?
I'm not saying this chart is accurate, just how it would have to be interpreted.
What it's claiming to show wouldn't be the money supply of Yuan. It would be the market cap of Yuan.
Edit: I have seen money supply charts showing that the value of Yuan is greater than that of dollars and that also strikes me as very odd. It doesn't exactly mean their GDP has to be larger, but since Yuan are less used globally, it does seem to imply that China has a larger GDP. IDK, there's probably something goofy in the methodology or data.
This graph's interpretation is actually kind of odd. By denominating both in dollars, the two curves end up meaning different things.
The US curve is the money supply but the Chinese curve is the value of their money supply. If China completely stopped printing money and their currency appreciated, wouldn't the graph look the same?
It would be better to just index each nominal money supply to the same base year.