At that time, China adopted the linked exchange rate, which was fixed by ourselves and pegged to the US dollar, and has remained unchanged ever since.

1993=5.76 19 , 1994=8.6 187。 Due to 1993 and 1994, domestic inflation was very serious and the economy was seriously stagnant. In order to expand foreign trade, the government has taken one-step measures to devalue the RMB, which has formed the above phenomenon.

Main background:

During the period of 1988, China intentionally liberalized its prices, and the price increase of tobacco and alcohol in the previous period constituted a strong signal, which led to the snapping up of commodities, and the price rose by 2 1.5% in that year. It has brought huge inflation, and the GDP growth rate has dropped sharply for three consecutive years. Take measures to rectify the economy until 199 1. 1988 GDP growth:11.2%; 1989 was 4.2%, and 1990 was 3.9%.

1992, after Comrade Deng Xiaoping's speech on his southern tour, loans from financial institutions exceeded loans. All the trading price restrictions in Shanghai stock market were lifted, and the stock market rose sharply. Also ushered in a round of GDP and CPI rise, overheated funds led to the economy began to get out of control, so interest rates and deposit and loan interest rates rose all the way. By 1993, the one-year deposit and loan interest rates had risen to 10.98% and 12.24% respectively.

After the exchange rate reform of 1994, the RMB was in a state of ultra-depreciation. For example, 1 USD can only be exchanged for about 7.5 yuan RMB, but foreign investors who come in to invest have exchanged for 8.6 yuan RMB. Foreign businessmen entered with money, poured into domestic land on a large scale, invested and set up factories, the domestic foreign trade economy developed greatly, and the manufacturing industry moved to China.

Then came the Southeast Asian financial crisis of 1997.

Generally speaking, the exchange rate reform of 1994 attracted foreign investment, developed foreign trade, escaped the subsequent economic crisis in Southeast Asia, and joined the WTO in 2000, establishing China's position as a manufacturing exporter.