Exchange rate; Purchasing power parity (PPP). Transfer zone system; Cointegration test by using Markov method, the transfer system of our country from January 1980 to August 2004 yuan for purchasing power parity (PPP) Engel - Gr anger cointegration test analysis. We found that the purchasing power parity check can be made up of two different system to depict the endogenous area, and the area division and the RMB exchange rate system reform, economic policy adjustment and inflation rate changes and other important economic events. We also found that the RMB exchange rate the PPP hypothesis was set up for a long time, but in the short term, the renminbi exchange rate deviation from purchasing power parity (PPP). We measure the degree of present RMB exchange rate in the short term, from the perspective of purchasing power parity (PPP) hypothesis, we found no support for the appreciation of the RMB exchange rate should be empirical evidence.

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