Choice Of Renminbi Exchange Rate Regime Under The Gradual Open

The financial crises of the 1990s that happened in the emerging markets have shown that in a world with high capital mobility, the selection of exchange rate regime has direct impact on the stability and safety of one country's economy. For China, we'll also face more open circumstances and more capital mobility, as China has become a member of World Trade Organization (WTO). From this case, on the base of theories of exchange rate regime selection, this paper investigates the choice of Renminbi exchange rate regime in the trend of flexibility and bipolarity of the international currency system, from the point of sustainability and crisis prevention of regime. The empirical work shows that the present regime called "managed floating" is in fact a kind of fixed regime pegged to US dollar, which is reasonable under the current capital control. However, with the economy gradually opening, the capital control will be loosen by degrees, then the peg will produce huge cost and have potential risks of incurring crises. So it is internally necessary for Renminbi regime to be rearranged. For the trilemma of policies in the open economy, the free-floating regime will be the final orientation for the Renminbi regime.