Currency policy of China in the context of modern realities of the foreign exchange market

The Chinese economy is the largest in the world while it still strictly controls the exchange rate value. Through a significant expenditure of foreign exchange reserves, the government manages to maintain the rate at the target level. Nevertheless, the constant expectations of the renminbi devaluation have a negative impact on the investors’ plans for the Chinese economy, which leads to a significant capital outflow. The paper reviews the possibility of transition to a floating regime that will provide sufficient flexibility as well as prevent excessive controllability and flight of capital. Faced with high expectations of the renminbi depreciation, the current policy of stabilizing the exchange rate may be inefficient and reduce the country's welfare due to expensive transactions on the open market.