Here I will briefly discuss China's progress in exchange rate regime reforms. In 1994, China unified the dual-track exchange rate regime, which used to offer two different foreign exchange prices of the renminbi. Since then, China has been implementing a managed floating exchange rate regime and reforms were pursued in a" mini bang approach rather than a"big bang, which perfectly suited Chinas specific circumstances. From 1994 through 2002, the real effective exchange rate (reer) of the renminbi which is regularly compiled by the Bank of International Settlements increased very rapidly together with the U.S. dollar, to which the renminbi was pegged. Between 2002 and 2005, when the U. S dollar weakened in value, the renminbi started to depreciate along with the dollar, which caused some problems and disputes In 2005. the preconditions for foreign exchange mechanism reform were broadly in place. For example, the financial reforms were well under way, and major state-owned banks were overhauled and listed (or were to be listed). The foreign exchange market was developed to a better level, and Chinas capital account was gradually opened. Most important, China was experiencing stable growth and low inflation, which provided a relatively favorable background for reform. Therefore, as the opportune time arrived China decided to de-peg the renminbi against the U.S. dollar, and hence came the more flexible renminbi exchange rates afterward. Since the 2005 reform to the end of February 2013, the renminbi nominal exchange rate to the U.S. dollar has appreciated about 32 percent, and the reer of the renminbi appreciated by more than 36 percent. The trend of the renminbi exchange rate has changed from unilateral appreciation to two-way floating and the price now falls into a broad equilibrium range4 Here I will briefly discuss China’s progress in exchange rate regime reforms. In 1994, China unified the dual-track exchange rate regime, which used to offer two different foreign exchange prices of the renminbi. Since then, China has been implementing a managed floating exchange rate regime, and reforms were pursued in a “mini bang” approach rather than a “big bang,” which perfectly suited China’s specific circumstances. From 1994 through 2002, the real effective exchange rate (REER) of the renminbi, which is regularly compiled by the Bank of International Settlements, increased very rapidly together with the U.S. dollar, to which the renminbi was pegged. Between 2002 and 2005, when the U.S. dollar weakened in value, the renminbi started to depreciate along with the dollar, which caused some problems and disputes. In 2005, the preconditions for foreign exchange mechanism reform were broadly in place. For example, the financial reforms were well under way, and major state-owned banks were overhauled and listed (or were to be listed). The foreign exchange market was developed to a better level, and China’s capital account was gradually opened. Most important, China was experiencing stable growth and low inflation, which provided a relatively favorable background for reform. Therefore, as the opportune time arrived, China decided to de-peg the renminbi against the U.S. dollar, and hence came the more flexible renminbi exchange rates afterward. Since the 2005 reform to the end of February 2013, the renminbi nominal exchange rate to the U.S. dollar has appreciated about 32 percent, and the REER of the renminbi appreciated by more than 36 percent. The trend of the renminbi exchange rate has changed from unilateral appreciation to two-way floating and the price now falls into a broad equilibrium range