China's Ongoing Exchange Rate Reform : New Developments But Old Uncertainties

China's currency, the renminbi or yuan, is not freely convertible on international foreign exchange markets; foreign exchange is still heavily controlled in China even though major reforms swept the Chinese foreign exchange control regime in 2005. Whilst foreign exchange liberalisation reform is underway, uncertainties exist and the market has to have a second guess how further reform will move forward and whether the government will make a policy U-turn at a certain point. These uncertainties increase transaction costs and hinder China's deeper financial reform