Studies On The Effects Of RMB Exchange Rate To The Price Of Exports Of China

The RMB exchange rate against the dollar has been in a steady, small, high-frequency dynamic revaluation process for more than two years since the reform of RMB exchange rate formation mechanism comes into being in July 2005. However, China's exports has continued to increase substantially, as while as the trade surplus. This phenomenon that can not be explained by these traditional theories of the balance of payments needs to be interpreted from the new perspective.The paper studies the conduct of China's export-enterprises' micro-pricing by using the theory of incomplete exchange rate pass-through to try to find out the specific mechanism and extent of effect by changes of RMB exchange rate to export-enterprise in China. Our paper not only has the theoretical significance on expanding the effectiveness of exchange rate policy, but also has important practical significance on China's exchange rate policies, trade policies, as well as the choices of opening-up model.This paper has three main innovations: First, the innovation of research perspective. Anciently, the research of RMB revaluation's effects mainly concentrated on the macro or middle level. But this paper interprets from the start with microscopic view of the main export enterprises. It is still rare. This innovation not only makes the conduction process and the specific mechanisms possible, but also makes the results more reliable. Second, Based on empirical studies on the export prices in connection with the RMB exchange rate, the paper differs with the general study of only considering the overall export price index and the relationship with the exchange rate. It contrasts and analyses the industry panel data and country panel data, and partitions sectors and countries to study the effects of passing through of export prices in order to analyze thoroughly the reason of incomplete exchange rate pass through of tall exports prices of China. So makes the results more reliable. Third, one of the conclusions of the paper is that there are no significant differences in different export industries' exchange rate flexibility of pass through, but there are obvious difference in the export object countries. The other is that the ability of reducing markup ration in export companies of China is limited, mainly by reducing the cost such as increasing of imported raw materials and decreasing real wages of workers to reduce the rate of transmission.This paper believes that exporters can absorb a certain level of the exchange rate movements, and the exchange rate policy is void in the short-term, but from a long time, the appreciation of the RMB has a prominent role in readjustment of the industrial structure in China. But fundamentally, only changing the mode of China's economic growth, including through adjusting the income distribution policy to effectively improve domestic demand, and the transformation of foreign trade growth mode, and so on, can achieve a balanced development of the economy at home and abroad.