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The reform of the exchange rate regime in China can be marked as a flipping transition rather than a gradual, one-directional reform, despite the announced policies of managed float since 1994 and the commitment of central bank officials of greater flexibility in the long-term. This paper aims at explaining why under the surface of planned incrementalism, exchange rate policymaking still suffers from ad hoc fluctuations and unpredictability. Challenging the view that emphasizes international pressure in influencing the reform process, I argue that domestic political institutional changes and the resulting political struggle within the increasing fragmented institutions are powerful in explaining the flipping patterns in the reform of exchange rate regime in China. This argument is supported by comparative analysis of the two financial crisis periods with evidence from content analysis of policy documents. [ABSTRACT FROM AUTHOR]