| The RMB exchange rate against U.S. dollar has appreciated about 35% in the past 8 years since 2005. RMB exchange rate reform chose the gradual reform pattern, which appears in characteristics of slight unilateral appreciation with expectation of sustained and long-term appreciation. The defect of this reform pattern is that appreciation persists and continues reinforcing itself, forming appreciation inertia. Under the circumstances of our economic downturn, the study of accelerated appreciation and continuous appreciation expectation of RMB is quite urgent and well expected.On the background of the significant appreciation of RMB exchange rate, The Sino-US trade imbalance hasn’t gotten better, but has aggravated, which is on the contrary to not only the traditional theory, but also to America’s initial intention. This paper is dedicated to find out the "Sino-US trade balance Puzzle" in the new perspective of exchange rate expectation.Taking exchange rate expectation as an independent variable into theoretic model is what makes this paper different from previous studies. Firstly, this paper studied the properties and influencing factors of exchange rate expectation. Then this paper focuses on how exchange rate expectation affects the Sino-US trade balance by Marshall-Lerner condition, the real exchange rate, intertemporal consumption, false trade and money supply. This paper mainly makes researches on Sino-US Trade Imbalance from the Perspective of RMB Exchange Rate Expectation and gets some new findings.It is found out that RMB exchange rate expectation is a kind of adaptive expectation. Via quantitative analysis, it has been found that the pressure of appreciation, which can be reflected in change of exchange rate and foreign exchange reserve, has a prominent impact on exchange rate expectation. By quantifying the foreign political pressure, this paper finds that foreign political pressure is expected to have a relatively large impact on RMB appreciation and defusing political pressure abroad is an important means of eliminating the expected appreciation.The exchange rate expectation is added into the Marshall-Lerner condition. After theory and econometric analysis, it is found that the exchange rate expectation affects trade balance by two ways. The first one is that exchange rate expectation inhibits the regulating effect of exchange rate on the trade balance, and the another way is that the exchange rate expectation affects directly imports and exports, so that appreciation may not only not reduce the surplus, but also may cause surplus to expand.The exchange rate expectation is added into Balassa-Samuelson effect theory, it is derived that the real exchange rate are mainly affected by the variation of exchange rate expectation, and factors ultimately affecting the trade balance are variation of exchange rate expectation and income.From the theoretical analysis of how exchange rate expectation affecting trade balance by intertemporal consumption, it is derived that exchange rate expectation and trade balance are negatively correlated.Exchange rate expectation of appreciation and interest rate differentials have attracted a large number of arbitrage capital in the form of false trade, causing a substantial increase in trade surplus with the United States.According to the SVAR analysis results, RMB appreciation expectation affects asset prices and inflation by influencing the money supply, generating wealth effect and price effect on the Sino-US trade balanceThe relative researches on exchange rate expectation enable this paper to better explain the impact of exchange rate on trade balance, therefore better explains the Sino-US trade imbalance issue. Concerning the exchange rate policy, the management of exchange rate expectation should be taken into serious consideration. Our government should regulate Sino-US trade balance by managing exchange rate expectation. By guiding exchange rate expectation, China can make a better exchange rate policy.
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