An Attempt to Demonstrate the Significant Role Played by Institutional Change in China's Sustained Economic Growth

Abstract

During China's reform and opening, the Renminbi exchange rate mechanism has undergone several modifications. It has steadily moved from an early fixed exchange rate regime to a market-determined, managed floating exchange rate system. At various periods, each stage of reform has contributed to China's economic growth. The purpose of this study is to examine, from the perspective of the reform of the Renminbi exchange rate regime, whether the change in the Renminbi exchange rate regime has impacted China's sustained economic progress. Using the theoretical system of national income accounting and the multiple linear regression model, the information includes data on gross domestic product (GDP), the real effective exchange rate of the Renminbi, social fixed asset investment, population consumption level, and import/export balance from the China Statistical Yearbook 2006-2021. Then, it is concluded that this institutional change contributes significantly to China's sustained economic growth, and reform ideas for China's institutions are presented.