In the early years of the twenty-first century, China''s continuing large current account surpluses and rapid accumulation of foreign exchange reserves have focused considerable global attention on the value of the Chinese currency and the feasibility of its exchange rate regime. Given the fact that any change in China''s exchange rate will have a major impact internally as well as externally, the issues of the renminbi appreciation and the optimal option for China''s exchange rate regime have become of major concern to China and many other countries. Very little academic literature exists on clarifying these issues theoretically and empirically in an integrated framework and in light of the Chinese distinct experience. This book, therefore, provides a new insight into China''s exchange rate policy by applying a macroeconomic-balance approach to analyse the equilibrium exchange rate and the desired exchange regime for China in favour of its required macroeconomic adjustment. The analysis should help build a more informed dialogue between China and the rest of the world and should be also useful to professionals in government, business and other academic organisations.