Suppose the U.S. Treasury Secretary made a trip to China to discuss currency manipulation charges against the

Question:

Suppose the U.S. Treasury Secretary made a trip to China to discuss currency manipulation charges against the People's Republic Bank of China. Suppose further that China refused to bend on its fixed policy relative to the dollar, but it agreed to begin liberalizing controls on its current international transactions, as well as international borrowing and lending. Explain the effect this agreement should have, if any, on China's ability to control its M2 money supply.
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...