China reforms the renminbi exchange-rate regime
2005-07-21
The People’s Bank of China introduced a managed floating exchange-rate regime referencing a currency basket from 7/21.
Conditions at the time
A policy was pursued to shift the renminbi’s dollar-linked system toward a more flexible exchange-rate regime.
How events unfolded
The People’s Bank of China introduced a managed floating exchange-rate regime referencing a currency basket from 7/21.
Stakeholders and impacts
The People’s Bank of China, the State Council, importers and exporters, and foreign-exchange banks were parties to the policy change.
Information available at the time
On that day, the rate was adjusted to 8.11 yuan per dollar, with daily dollar-trading fluctuations set at ±0.3% around the reference rate.
Findings confirmed later
The institutional benchmark changed from a single-dollar peg to a basket-referencing approach.
Alternative interpretations and limitations
A managed float differs from a free float. Exchange-rate flexibility cannot be regarded as the only factor changing export competitiveness.
Source-based context and interpretation
The PBC replaced the dollar peg with a managed float referencing a basket while retaining trading limits and official management. IMF staff subsequently described foreign-exchange-market reforms without a significant impact on exchange-rate movements. Staff and the authorities differed on the effects of further appreciation and the pace of reform. ASSETCASTING interpretation: A regime label and realized price flexibility are different assessments. Separate the basket, trading range and intervention; IMF staff recommendations were neither already realized outcomes nor conclusions agreed with the Chinese authorities.
Evidence coverage through 2007-05-17 · Sources checked 2026-10-14
Related events and periods1
- Trade and credit expansion with accumulating financial imbalances
An event or period whose recorded start falls within this editorial interval. This does not establish that it caused or represents the characteristics of the era, nor guarantee that the entire period falls within the interval.
Historical events do not guarantee future recurrence or investment performance.