Does China Really Say No? The Impact of International Political Pressure on China's Exchange Rate Policy

From 2002, the Chinese government insisted that it would not give in to international pressure to change the renminbi (RMB) exchange rate regime. The main question asked in this paper is whether the Chinese government did resist this pressure from early 2002 to mid-2008. Judging from Chinese official documents, records released after bilateral meetings between the United States and China, testimony given by U.S. officials in the U.S. Congress, Chinese government policy statements, and measures related to the RMB exchange rate, we conclude that, in addition to economic and domestic factors, China's exchange rate policy was indeed influenced by American political pressure, and that this pressure led to reform of the RMB exchange rate regime and the widening of the floating band of the RMB exchange rate.