Looking at the balance sheet of the People's Bank of China will help to understand this problem. It's on the website of China People's Bank.

Although the People's Bank of China is not so independent, it is a member of the government, but as a monetary authority, it is still different from the "government". Therefore, in the previous answer, "government investment in infrastructure", "allocation of funds to state-owned enterprises" and "stripping off bad debts" are all related to the increase in currency issuance, but it cannot be said that these are the channels for currency delivery. There must always be some arrangement on the path. As for the replacement of damaged banknotes and coins, the new ones will be recovered and destroyed, without increasing the currency issuance.

The newly issued currency means that the central bank will increase its liabilities and add a sum to the corresponding assets.

For example, the People's Bank of China buys foreign exchange from commercial banks, the central bank gets foreign exchange (the central bank's assets increase), and commercial banks get RMB, which is created by the central bank out of thin air (the central bank's liabilities increase), and the newly added RMB is injected into the banking system. This is what everyone says about issuing RMB through foreign exchange.

For another example, the central bank can adjust the money supply through open market operations. If you put in money, buy the national debt held by commercial banks. At this time, the central bank's liabilities and assets increased at the same time, injecting new "money" into the banking system. If it is necessary to tighten the currency, the central bank will sell the national debt to commercial banks and recover the "money". At this time, the assets and liabilities of the central bank will be reduced at the same time.

The government's fiscal deficit will also affect the money supply. In the 1990s, the laws of the People's Bank of China seemed to prohibit direct overdraft from the central bank, and the fiscal deficit needed to be filled by national debt. The government spent a lot of money (hosting the Olympic Games, investing in infrastructure, etc.). ) and need to issue treasury bonds, subscribed by the people and financial institutions. The People's Bank of China cannot directly subscribe for government bonds (direct subscription in the United States refers to QE 1 and QE2). People and financial institutions are also short of money, and the central bank just supplements some money and injects it into the banking system. See the method above.

In recent ten years, the main channel of currency issuance can be said to be foreign exchange. The increase in foreign exchange reserves (central bank assets) means that the central bank has increased its liabilities by trillions, that is, the RMB in circulation.