Structural Effect Of Changes In RMB Real Exchange Rate

In recent years the study of the effects of real exchange rate on economic growth is reviving in western academe with the growth of exports and GDP in the emerging economies (especially China). Depreciations may stimulate growth; on the other hand, appreciations may impede growth. The channels of the effects may be capital accumulation and growth of TFP. Depreciated exchange rates may be only useful for jump-starting growth, and the developing countries may need to exit the depreciated and fixed strategies as their economies develop.In general, the focus of western "main-stream" economics is on real exchange rates and economic growth. Few studies refer to the restructuring effects of the changes of real exchange rates. Some studies haved only concerned to the relations between real exchange rates and outward-oriented economics or the "Dutch diseases".On the other hand, the "heterodox"(strcturalist) models have always concentrated on economic structures (especially in the developed countries). Strcturalist models are always interested in the relations between distribution of incomes and consumption, investment and the general economic growth. While most of the Strcturalist models are only concerned with domestic economy, only a few studies have concerned in exchange rates.Exchange rate has an important influence on economic structure. Economic restructuring always requires the adjustments to the exchange rate level. This essay tries to build and use a structuralist macroeconomic model so as to study the impacts on economic structure of real exchange change. To a large extent, the theoretical framework and prescriptive used in this essay may be relatively creative in the study of the impacts of Renminbi real exchange rate change.From the real need of China’s economic restructuring, this essay build a structuralist macroeconomic model to expose the internal mechanisms of the impacts on economic structure of real exchange change. Then an econometric work is operated to test the distributional impacts of Renminbi real exchange rate change. This essay try to expose the reform suggestions on the Renminbi exchange rate regimes so as to promote China’s economic restructuring. This essay’s topic and results have strong practical meanings.In the open economy real exchange rate change has important impacts on the distribution of income. Through influencing distribution of income in deferent productive factors (such as between the share of wage and the share of profit) and in deferent sectors (such as between tradable sector and nontradable sector), real exchange rate has important influences on trade, consumption and investment so as to the global economic growth.Real exchsnge rate depreciations are usually benifitful to raise the shares of capital and the rates of profits in tradable sector resulting to the expension of export and investment. On the other hand, Real exchsnge rate appreciations are usually benefit the share of wage and the profit of nontradable sector resulting in the expension of internal demand and the development of service sector and innovations.Using the real effective exchange rate as a represent of real exchange rates, and using the total saving rate as a represent of the share of profit, this essay operates an econometric test on the relations in Renminbi real exchange rate change and China’s total saving rates to test the theoretical results. To a large extent, the econometric results support the theoretic results.Then this essay compares the economic facts in China, Japan and Germany, especially the deferent changes in Japanese Yen and German Mark real exchange rate and the resulting economic influences on Japan and Germany and try to get some useful suggestions for Renminbi exchange rate regime reforms and China’s economic restructuring.Through international comparison it can be found that between1980to2011Japanese Yen not only appreciated to very high degree but also companied with high variety. This resulted in declining profits for Japanese company and many industries transferred to overseas, resulting "deindustrialization" and "lost decade" in Japanese economy. On the other hand, the Germany Mark exchange rate kept very stable and Germany economics have not met the similar problems in Japanese economy. The Korea’s experiences were similar to Germany.Today China’s economic restructuring is in the vital stage, and it’s essencial to comprehensively deepen the reforms of the economic regimes. We need to greatly increase the residents’ incomes so as to adjust and improve the structures of income distributions. In recently years the amounts and structures of China’s trade balances have been changing greatly. The tasks of industrial restructuring are still very huge. China’s general productive factor markets have also been changing greatly. In general in the furure the prices of China’s general productive factors will rise. All of the aboves require deepening the reforms of the RMB exchange rate regime.Several suggestions on the reforms of the RMB exchange rate regime are proposed to promote China’s economic restructuring. Proper appreciations of Renminbi real exchange rate in proper times can promote China’s economic restructuring, such as the expension of internal demand, the development of service sector and promotion of innovations. It’s necessary for preventing Renminbi exchange rate from appreciating so much as to cause "deindustrialization" which will bring unemployment or bubble economy. Promoting the labor productivity can benefit exchange rate appreciations and wage raises. It is necessary to integrate nominal adjustments, wage-price adjustments and labor productivity changes so as to promote China’s economic restructuring.