| Since the economic reforms and open-door policies began in 1978, China has become the fastest growing economy in the world. The average annual growth rate of GDP in the past more than 30 years was close to 10 percent, which was called"the Chinese miracle". The rise of Chinese economy and appreciation of RMB become the world's focus when we come to 21st century. One of the important achievements in the external sector we gained is that the export and trade surplus has grown up rapidly. Thus the issue of exchange rate of RMB attracts more attention than the rising tempo of Chinese economy. At the heart of the debate on China's exchange rate policy are two related issues: the proper scale of RMB exchange rate and the trend of exchange rate regime reform in the futureLooking back on the evolution of RMB exchange rate regime, China has taken a road different from other developing countries and emerging economies which have made frequent adjustments on their exchange rate systems and may be forced to exit the existing exchange rate systems. Even though the evolution of RMB exchange rate regime tends to shift to a more flexible exchange rate regime, its concrete route has distinct characteristics. The thesis makes a comprehensive study on RMB exchange rate regime from the perspective of globalization of open economy by taking account of U.S .dollar supremacy and RMB sovereignty, and seeks Chinese characteristic mode of exchange rate regime to clarify the orientation of exchange rate reform in the future. Firstly, the thesis studies on the formation and influences of U.S. dollar supremacy and the relationship between RMB sovereignty and U.S. dollar supremacy as well, and then poses some key issues involved in the research of RMB exchange rate regime. Secondly, it illustrates that the maintenance of RMB sovereignty is the fundamental characteristic of our exchange rate regime and the important institutional guarantee of the emergence of Chinese economy by analyzing the evolution of RMB exchange rate regime in the development of Chinese economy and the sound interaction of it and the emergence of Chinese economy. Thirdly, it points out that the conflict of U.S. dollar supremacy and RMB sovereignty is the main source of current difficult position through the deepened analysis of the appreciation pressures on RMB and the dire straits of RMB exchange rate regime. Finally, it draws a conclusion that the essential approach to push forward RMB exchange rate reform and break away from the current difficult position is to insist on the currency sovereignty theories of Marx and Keynes and adhere to the principles of government intervention and administration to prudently open the capital account on the basis of Chinese economic interests and to make RMB eventually become an international standard comparable to U.S. dollar by creating proper conditions.In view of the current international monetary system, the key to RMB exchange rate arrangement is the exchange rate between RMB and U.S. dollar. The leading position of U.S. in the world economy is relevant to the long-term U.S. dollar supremacy. Keynes earlier said to British government that only when Britain could maintain the pound price linked to gold, could it maintain its competitive position in the world. The U.S. established the dollar standard by ingeniously depending on the prestige of gold via the Bretton Wood System, and made dollar the god in the world of commodity and in the capital market. U.S. dollar firmly holds the leading position in the international monetary system and the world economy. The collapse of the Bretton Wood System discharged the international obligations committed by the U.S. and shifted U.S. dollar from a standard currency to a currency with supremacy. When U.S. dollar as an international currency is accepted by the other countries, U.S. creates a new social force in the world. With U.S. dollar supremacy, the U.S. leaves trade deficit uncorrected, grabs the resources of other countries, borrows more external debts, controls the creditors, and seizes the currency sovereignty of other countries, which have deepened impacts on the structure of the world economy and finance. Therefore, the conflict of U.S. dollar supremacy and domestic currency sovereignty is the reality that the countries all over the world——especially the vast developing countries must face.The emergence of Chinese economy makes China an economic house-power and a trade house-power, but not a financial house-power. The maintenance of domestic currency sovereignty and economic interests inevitably results in the conflict of domestic currency sovereignty and U.S. dollar supremacy. We need to admit that RMB is not an international currency, and is still a weak currency in the international monetary system. In face of the conflict, we should accept the fact of U.S. dollar supremacy, but also take advantage of the U.S. dollar supremacy to formulate RMB currency strategy——an exchange rate regime that uses U.S. dollar standard and ensures the autonomous and independent development of Chinese economy. This Chinese characteristic regime encompasses the following points. First, the changes in exchange rate are based on the interests of our country. Second, the management of our domestic currency supply is on the basis of the interests of both China and other relevant countries. Third, there should be administrations and restrictions on capital flows. Only if we hold the said regime, can we maintain our domestic currency sovereignty and resist the U.S. dollar supremacy.During the different stages of our economic development, RMB exchange rate regime have realized stable transformations and achieved sound economic performance in response to the economic structure, economic development, financial market conditions, the degree of openness and the government policy objectives etc. In the period of the closed planning economy, our external economic contacts almost suspended, trade deficits were all assumed by the government, and thus RMB exchange rate degenerated to a unit of account but lost its inherent economic implications and had remained unchanged for 16 years from 1955 to 1971. RMB exchange rate had been stably overvalued for long during this period of time; its deepened reason was that our country carried out the heavy-industry-oriented economic development strategy. By artificially overvaluing the domestic currency and adopting a lower-level exchange rate policy, we could ensure that the capital-intensive heavy-industry sectors developed as a top priority. It also indicates that RMB exchange rate regime should be adjusted because of the inherent requirements of transformation of our economic development strategy after we adopt the reform and opening-up policy.In the transition period from the planning economy to the socialist market economy, RMB exchange rate regime did not adhere to the reform mode of"Washington Consensus"for it should be adaptable to the evolutionary transition of economic system. But instead, we adopted a dual exchange rate system by gradually eliminate the overvalued distortion in exchange rate due to the old exchange rate regime. The evolutionary characteristic is distinct for RMB central rate was directly adjusted by the central bank and gradually exited from the fixed exchange rate regime and shifted to a more flexible exchange rate regime rather than expanding the degree of fluctuation. The feature of the adjustment is the irregular rise or drop, more frequency and long time span. It enhanced market function step by step in the exchange rate formation system, and maintained the stability and controllability of the exchange rate via strict capital control.With the objective requirement of the regime transformation, the exchange rate impact on the periodical development of economy can be generally summarized as , The Chinese reform-open policies\foreign trade\price index\taxes and financial reform ,exchange rate arrangement reform, import and export, foreign investment and the expanding on international business and economy and further opening up. RMB exchange rate regime in transitional period steadily solves the problems overvaluation to the old regime by way of adjustment of slow and irregular nominal exchange rate and gradually gets close to market equilibrium exchange rate. Our country hasn't appeared the situation of vicious inflation that many transition economy or developing countries have experienced. Through regime innovation and related policy adjustment, RMB exchange rate returns to the suitable level with the basic economy. Lay the foundation to opening up to the outside world strategy and pushing the economy into the global economic system. In the mid-1990s, China made clear direction to the socialist market economy and opening up deeply, which formed Export-led growth model, the basic form of economic external dependence is rising year by year, external demand is one of the important powers to promote economic development and China's economic growth period comes.For the relationship between exchange rate regime and macroeconomic performance, there is no so-called optimal exchange rate regime consistent conclusion according to theoretical research at home and abroad and empirical analysis. Since economic development level, openness, resource endowment, the development model and perfect degree of financial market is different, only the interests of the exchange rate regime suited to their national conditions and safeguarding is appropriate. There are two major change in this period: in 1994, execute based on market supply and demand, single managed floating exchange rate regime, In 1997the Asian financial crisis focus on dollar peg fixed exchange rate regime; in 2005 based on market supply and demand, with reference to a basket of currencies, managed floating exchange rate regime Chinese exchange rate regime is dominated by the government, that represents the embodiment of the government policy goals, the smoothness of evolution process measures is being orderly and controllable. Fulfill the employment demand, maintaining the currency stable, or a combination of the above. Our government realizes the economic growth \the effectiveness and independence of monetary policy, financial security and the stability very well according to adjustment of exchange rate regime and management of capital and financial account.Chinese economic growth and the high-speed development of import and export attracted worldwide attention, the pressure on the appreciation of the RMB became more and more intensively since 2002 .There are several reasons mixed together. China's economic rise is internal driving force; Long-term international payment surplus rising, massive foreign exchange reserves, Chinese economic structure and development strategy that appreciation is the basis; Global economic imbalance is the external pressure. But, "Balasa - samuelson effect" theory and the above economic factors can't provide convincing explanation In the analysis of political point of economy, the pressure on the appreciation of the RMB is not only a simple economic problem, but also a contest of national benefits. Objectively, the imbalance of internal and external economy under pressure on appreciation gradually increased the cost of maintaining fixed exchange rate regime, which need a certain adjustment and corresponding requirements. The reform in 2005 reflects the ideas. It is difficult to maintaining monetary sovereignty increased because of the conflict between dollar hegemony and RMB sovereignty.As China's economic status ascended, the level of opening up improved, capital flows frequently. We are now facing more and more complicated domestic and international environment. The current exchange rate regime appeared intension of internal and external imbalances macroeconomic, inflation, other problems squeezed by monetary policy. The pressure of RMB appreciation increase continuously by ways of analysis of the current exchange rate regime, we find it that the deep reason now we faced the problem is the defects of international monetary system characterized by US dollar hegemony no matter trapped dilemma of conflicted virtue or currency mismatch in developing country. Dollar hegemony cause global economic system imbalance and the financial turmoil strengthened the connection of the local currency in the developing countries with the US dollar, weakening local currency sovereignty and the ability of adjusting economy by macroeconomic policy. The economic imbalance between China and US is the imbalance of international monetary system. The conflict between dollar hegemony and RMB sovereignty will inevitably become outstanding. So the exchange rate regime is now facing the problem. It is absolutely false to solve macro-economic problem by the way of one-off revaluation of RMB exchange rate flexibility, accelerating the expansion of the marketization and liberalization either in theory or in practice by domestic and international research.The key for us to get rid of the dilemma of current macroeconomic and exchange-rate system in China depends on how to adhere monetary principle sovereignty. The global financial crisis compels academic circles to reflect the theory about Neoliberalism economic thought reflection, call back Keynesian. The state standard exchange rate regime theory proposed by Keynes state standard should become the theoretical basis of the future reform, taking the national interest as the core, coordinating dollar hegemony with RMB sovereignty flexible, opening up the capital account liberalization carefully, let RMB become international standard and promote monetary system reform. This is the "Chinese model"we always should adhere to in the future process of economic growth.
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