system
Given the following post, respond as if you're commenting on Reddit:
human
If China is keeping its currency artificially low, how does it avoid inflation from printing more money?
gpt
The Chinese government pegs its currency in order to control its money supply. The Chinese government decides upon an exchange rate and purchases foreign reserves through a process called sterilization in order to maintain the predetermined exchange rate. Sterilization is carried out by the Chinese central bank by exchanging US dollars for Yuan and then purchasing back the newly distributed Yuan through selling Chinese government bonds. Government bonds do not create inflation, while Yuan in circulation do. This is a technique that China has used for several years to ensure a stable currency. This process is used by several other countries, including Switzerland, Hong Kong and Tawain.