This paper sees the evolution of the RMB from inconvertibility to convertibility as comprising two stages: reform at the “extensive margin” through introducing more convertible variants of currency, and reform at the “intensive margin” through making the RMB itself more convertible. The reform is seen to be extremely successful, reflecting the ingenuity of Chinese reformers combining innovativeness, caution, and boldness. The Chinese reformers have been mindful both of stability and the need to preserve a high savings rate. Notwithstanding sharp depreciation of the RMB through most of 1993, the move of RMB from a soft currency to a hard currency inspires national pride and confidence and has both economic and political significance.
Ho, L. S. (1996). China's road to exchange rate liberalisation (CAPS Working Paper Series No.33). Retrieved from Lingnan University website: http://commons.ln.edu.hk/capswp/47