The fact that China's broad money supply rose to become the world's highest in 2012 has highlighted the possible malignant effects of an excess money supply, with experts divided on the implications of the situation.

Economist Lang Xianping referred to China as "the world's biggest printing press in 2012" in a microblog entry he posted on Sina Weibo, the Chinese equivalent of Twitter.

Although its GDP accounts for roughly 8 percent of the world's total, China's money supply in 2012 was as much as 27 percent of the world's total, Lang wrote in his post.

Lang warned that a monetary oversupply will result in severe inflation and anger the public.

Statistics from China's central bank, the People's Bank of China , show that the country's broad money supply (M2), which covers cash in circulation and all deposits, grew 13.8 percent year-on-year in 2012 to reach 97.42 trillion yuan by the end of 2012.

The growth rate, 0.2 percentage points higher than that at the end of 2011, was slightly below the government's annual target of 14 percent for 2012.

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 indicto r," 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, surpasse d 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.

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.

Xi said that the real driver for price hikes is not stockpiles of money, but the growth rate of the money supply.

"As long as the central bank can keep the M2 growth rate under control, inflation will remain a healthy range," he said.

E Yongjian said the situation has remained optimistic thus far, considering the healthy 14-percent M2 growth target set by the government and the increasing role direct financing has been playing in China.

"Chinese have become increasingly sensitive to their assets. It's the government's duty to establish a proper mechanism to monito r and adjust market expectations," Lu said.

"Without stable market expectations, any asset allocation by individual investors will be futile," he said.