The term exchange rate regime refers to the method by which a bilateral exchange rate is determined.
Floating exchange rates
Under a floating system, the bilateral exchange rate is allowed to adjust to market forces. The exchange rate rises and falls depending on the demand for the two currencies. Many currencies "float", including the US dollar, the UK pound and the euro.
Fixed exchange rates
Under a fixed rate regime, the exchange rate is constant and does not respond to market forces. In order to keep the exchange rate fixed, the monetary authority must buy and sell currency and adjust interest rates. Hence, monetary policy must respond to market forces that affect exchange rates.
China currently operates with a relatively fixed exchange rate against the dollar.