A Study Of Effect Of RMB Appreciation Pass-through Into Export Price And Its Countermeasures

China begins to implement management floating exchange rate regime based onmarket supply and demand with reference to a basket of currencies since July21,2005.RMB exchange rate presents the two-way volatility, long-term appreciation trend. Duringmore than seven years of RMB continued appreciation, Chinese trade surplus in thegeneral or sub-industry is not reversed. Some industry’s trade surplus presents a risingtrend. Especially China’s exports growth of machinery and electronic products, chemicalproducts appear obvious upward trend. Overall, China’s trade structure continues toimprove, but the development pace of different industry is difference. The traditionaltheory of international payments can not explain the phenomenon. The dissertationanalyses the phenomenon from the market structure and industrial organization ofdifferent export industry based on incomplete pass-through theory，in order to concludeeffect of RMB appreciation pass-through into export price and its reason. Thedissertation proposes countermeasures for export enterprises transferring exchange raterisk and improving competitiveness. At the same time, put forwards concerning guidingsuggestion for China’s exchange rate policy, export strategy, economic growth andmonetary policy.The dissertation is based on the12main mamufacturing industry data under the HScommodity classification from July2005to December2011. It tests differences inflexibility of RMB exchange rate change to export price using panel data model. Overall,the effect of RMB appreciation pass-through into export price in incomplete. Price ofexport absorbs a large part of exchange rate movemengt by exporters lowering the localcurrency prices. From specific industries, the flexibility of exchange rate pass through totraditional labor-intensive commodities is less comparing with capita-intensivecommdities. Further considering the influence of exchange rate and technology onproduction cost, the flexibility of exchange rate pass through to majority of exportcommodities is reduced.Based on the theoretical and empirical research, considering the actual situation of the different industries, the dissertation discusses the reason of incomplete pass through frommany aspects, such as export commodities’ market forces, the extent of dependence onforeign market, export commodities’ competitive advantages. Base on the above analysis,under the low capability of transferring exchange rate risk, reducing production cost forexport enterprises is reliable by increasing imports of raw materials, increasing marketconcentration, enhance the technological innovation capability. From a long time, theappreciation of the RMB has a prominent role in readjustment of industrial structure andtrade structure in China. Fundamentally, only further improving RMB exchange rateformation mechanism, adjusting export trade strategy, changing the mode of economicgrowth including increasing domestic demand effectively, transforming the productionmode of high investment and high consumption, enhancing the capability of independentinnovation, improving the quality and efficiency of economic gowth, and so on, canachieve a balanced development of the economy at home and abroad.