However, if the decline is due to the central bank's intervention in the offshore market, and earned by foreign arbitrage, it is the public's loss. That is why we see the central bank tightening the volatility of the offshore market renminbi, and reducing the cost of the direct intervention in the foreign exchange market.

The central bank is just a tool to stabilize the over volatile exchange rate. However, the intervention itself will twist the market structure, so it won't be a permanent solution.

Third issue: With the International Monetary Fund having announced the inclusion of the renminbi in the special drawing rights basket, will forced reform continue?

On Nov 30, the IMF made public the renminbi's inclusion in its reserve currency basket. But there are many financial reforms that need to be promoted. The IMF has released the evaluation report on the renminbi's inclusion, which emphasized two points. One is that the renminbi's fluctuating rate is lower than that of other international currencies. Second is that there's a relatively big divergence in the renminbi's onshore and offshore exchange rates.

It is not easy to solve these two problems. After the Aug 11 reform, the onshore renminbi exchange rate's implied fluctuating rate increased from the initial 1.5 percent to 5 percent. It is still much lower than the 9 percent fluctuating rate that emerging markets and developed countries have at the same time.

The main reason is that, in China's domestic foreign exchange market, individuals' and enterprises' exchange settlement and sales are still restricted by the actual demand principle. So every day the actual exchange volume is only about $30 billion. When the central bank sets the median price, the renminbi won't have much of a large fluctuation.

This year, if the central bank takes the IMF's suggestion to continue increasing the renminbi fluctuating rate, then the central bank's tolerance for renminbi exchange rate depreciation will also increase. Since, in the past, the implied fluctuating rate was closely related to the annual appreciation rate of the renminbi, in the future the upper limit of renminbi exchange rate depreciation might exceed the upper limit of the annual appreciation.