Xi Junyang, deputy chief of the Modern Finance Research Center at the Shanghai University of Finance and Economics, said the question of whether China's money supply is excessive or not should not be decided exclusively through M2 readings.

"Prices are a more reliable indictor," he said.

A long-term view based on official inflation data shows two periods of money oversupply occurring in 2007-2008 and 2011, respectively. The consumer price index, a key gauge of inflation, surpassed 5 percent during both periods, Xi said.

PBOC Governor Zhou Xiaochuan revisited economic maneuvers made in 2008 at a forum held at the end of last year, saying that China had moderately eased its grip on lending at that time to offset the shock of the global financial crisis so as to stimulate the economy as quickly as possible.

Zhou explained that side effects are inevitable for any macroeconomic control efforts.

Lu Zhengwei, chief economist with the Industrial Bank, also doubted the reliability of using the absolute amount of M2 and the M2/GDP ratio to judge excess money supply.

"M2 accounting for a high percentage of GDP is not a new phenomenon in China," said Lu, attributing the situation to China's ongoing monetization reforms, which have put more financial products into the market and increased capital demand.

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