The FOREXDAILY reports that PBOC's 2009 bill issues will likely be down over 70%.

(emphasis mine)

PBOC's 2009 Bill Issues Likely Down Over 70% - Clearing House

SHANGHAI (Dow Jones)--Bill issues by China's central bank will likely fall more than 70% this year as Beijing eases monetary policy, the clearing house for China's interbank bond market said in a research note.

The People's Bank of China will likely sell less than CNY1 trillion ($146.3 billion) worth of bills this year, down sharply from CNY4.23 trillion in 2008, China Government Securities Depository Trust & Clearing said in the note published last week.

Outstanding PBOC bills will likely total CNY3.2 trillion by the end of 2009, down from around CNY5 trillion by the end of 2008, the clearing house said.

Since October, the central bank has injected funds into the banking system to boost China's economy, reversing the trend of recent years after economic growth fell to 9% in the third quarter, the slowest pace of growth in five years.

The PBOC drained a large amount of funds from the market in recent years by selling bills and repurchase agreements in its weekly open market options to curb flush liquidity in China's banking system.

My reaction: I don't know if you remember from my other posts, but these PBOC bills are what China uses to mop up the yuan it prints because of the dollar peg. Since the trade surplus is running around a record 40 billion and none of that is going to be sterilized, China's money supply is set to explode fast!

On a plus note, the major article that I have been writing about China is now 97% finished. I need to sleep now, but I guarantee it will be up by 9PM Eastern time tonight.