Since indirect banking or bank lending has outnumbered direct financing, mostly bonds and stocks, as the main source of capital for China's social and economic development, China's M2 is understandably higher than that of other countries, Lu said.

E Yongjian, a researcher with the Bank of Communications, echoed Lu's view, arguing that bank credit has played a much bigger role in China's social financing than in other countries.

As bank credit can drive up the money supply through repeated deposits and lending, China has been posting a much higher M2 balance than countries that rely on a more developed financial market for financing, E said.

Although it is still too early to tell if China's money supply has been in excess, analysts agree that from a long-term view, putting massive amounts of money into circulation will aggravate inflationary pressure.

To ward off potential inflation risks, Chinese have flocked to purchase precious metals, real estate and other wealth management products so as to maintain the value of their money.

A Beijing resident surnamed Yao said he hasn't saved as much money in recent times, despite getting a pay raise.

"I had saved about 20,000 yuan by the end of 2008, when I only earned a monthly wage of 5,000 yuan. Now, my salary has doubled, but living costs, especially rent, have also risen," said Yao.

Despite moving from a downtown apartment to a more remote location, Yao said his rent nearly doubled from 1,400 yuan per month in 2008 to 2,700 yuan per month now.

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