Existing RMB Exchange Rate Regime and Effects of Macroeconomic Policies —— Comment on RMB Exchange Rate Regime Reform

The existing exchange rate regime of China is in fact dollar pegged fixed exchange rate regime. It constrains the performance of China's macroeconomics policies. To promote the effectiveness of China's macroeconomic policies requires reforming the existing exchange rate regime. China's current economic situation determines that the short-term objective of the exchange rate regime reform is to establish exchange rate target zone, while the long-term objective is to establish floating exchange rate regime.