Global Liquidity Rebalances as China Surpasses US and G10 Economies

Global liquidity is quietly being reshaped, and the center of gravity is no longer the United States.

Recent data shows that the world’s supply of narrow money has expanded to record territory, with the bulk of new liquidity now originating from China rather than Western economies.

Measured on an adjusted basis, global M1 has climbed to roughly $45 trillion. China alone accounts for about $16.5 trillion of that total – more than one-third of all narrow money worldwide. The United States, using a post-2020 definition that excludes savings deposits, represents closer to $8 trillion, leaving it with a markedly smaller share of global liquidity creation than in past cycles.

This shift represents a meaningful break from historical patterns. For decades, increases in global money supply were primarily driven by the U.S. and other advanced economies. Over the last fifteen years, however, China’s monetary expansion has accelerated steadily, overtaking both the U.S. and the rest of the G10 combined. The pace of growth into 2025 suggests this is no longer a temporary policy response, but a structural feature of the global system.

Liquidity expansion of this scale tends to matter less for immediate economic growth and more for financial markets. When money supply rises faster than real output, excess capital often migrates into assets rather than consumption or investment. That dynamic has historically coincided with higher valuations, stronger speculative activity, and heightened sensitivity in markets tied to global capital flows.

What stands out in the current environment is not just how much liquidity exists, but where it is being created. As more monetary stimulus originates outside the U.S., global markets become less dependent on Federal Reserve policy alone. Capital can still move across borders indirectly, influencing asset prices even in regions where domestic policy remains restrictive.

For crypto and other scarce assets, this matters. Digital assets have shown repeated sensitivity to global liquidity conditions rather than U.S. policy in isolation. As non-U.S. money supply expands, it can still support demand for globally traded assets through financial intermediaries, offshore markets, and risk-on cycles.

That said, uneven liquidity growth can amplify volatility. Bursts of optimism may be followed by abrupt reversals as capital reallocates across regions and asset classes. Liquidity-driven markets rarely move in straight lines.

The broader takeaway is straightforward: the next market cycle is unlikely to be shaped by a single central bank. With China now playing an outsized role in global money creation, investors may need to rethink how macro liquidity, inflation risk, and cross-asset correlations interact in a more multipolar financial system.

Liquidity still drives markets – but its source is changing.