Under the paper money system, countries issue paper money as the representative of metal money, and refer to past practice to stipulate the gold content of paper money by law, which is called gold parity. The comparison of gold parity is the decisive basis of the exchange rate between the two countries. However, paper money cannot be converted into gold, so the legal gold content of paper money often exists in name only. Therefore, there are two mechanisms for the formation of exchange rate. One is the official exchange rate set by the government, such as the central bank. The second is the market exchange rate, which is balanced by the relationship between supply and demand in the money market. At present, the exchange rate of China against the US dollar is the official exchange rate. In other words, the exchange rate of RMB against the US dollar is determined by the government, not by the market. This is also the fundamental reason why the United States says that the value of RMB is undervalued and demands RMB appreciation.