First, let me explain the base currency. Base currency MB= cash in circulation C+ total reserve of the banking system R. Then in China, because RMB is not freely convertible, the central bank needs to operate when foreign exchange flows in.

Let me explain this problem from the balance sheet of the central bank. To put it simply, the assets of the central bank include foreign assets and domestic assets, and the liabilities include currency in circulation and reserve deposits of commercial banks in the central bank. Because RMB is not convertible, when foreign exchange flows in, the overseas assets in the balance sheet of the central bank increase (constitute a part of foreign exchange reserves), and at the same time, the balance sheet of the central bank

Liabilities, mainly currency, will increase accordingly (form foreign exchange), which is equivalent to providing the base currency. After the net base money is amplified by the multiplier, it naturally forms more money supply and brings inflationary pressure. Therefore, the central bank often carries out reverse repurchase operations to recover this part of liquidity.

I hope it helps you.