A managed floating exchange rate regime will enhance the efficiency of resource allocation, adjust the relation between domestic and foreign prices in a flexible manner, channel resources to the sectors that are driven by domestic demand such as the services sector, promote industrial upgrading, transform the pattern of economic development, reduce trade imbalances and over-reliance on export, enable domestic demand to play a more important role in economic development and thus promote sustainable and balanced economic growth.
2. We need such a regime to strengthen and improve macroeconomic policymaking. Since the beginning of the reform and opening-up and especially since the entry into the WTO, China has seized the historical opportunity of international industrial relocation and improved productivity and economic strengths.