How can China perfect exchange rate mechanism and contain financial risk at the same time?

This paper argues that gradual reforms of the RMB exchange rate regime should not be regarded as gradual appreciation. And compared to the revaluation of the RMB that was usually escaped by us, the choice of a concrete exchange rate mechanism might not be the most important. The empirical research in this paper showed that although China had announced to reform its exchange rate system, a de facto peg to dollar still existed last year, as the initial appreciation of 2% was not enough. To establish a truly flexible exchange rate mechanism based on market without harming important economic indicators, such as exports, employment and economic growth,the author argues that a further appreciation of 5 similar to 8% should be achieved at one time on the basis of qualitative analysis and scientific calculation.