Research On The Capacity Cooperation Between China And Asean Under The Uncertainty Of Exchange Rate

After the Bretton Woods system,many countries gradually abandoned the fixed exchange rate system and then switched to the floating exchange rate system,which caused the increasing of the global exchange rate change continuously and made exchange rate become an important variable affecting the internal and external balance of a country’s economy.As a result,exchange rate issue has gradually become a key concern of the international financial research field and the economic decision-making departments in various countries.From the perspective of industrial development,as an important price signal under the conditions of open market,exchange rate has become an important lever affecting the global allocation of resources and a tie for the international market.Thus,its change has a wide impact on the international specification and cooperation.As China’s economy entered “New normal of economy”,China’s economy is facing a transformation of the development mode and the development momentum.The takeaways are to promote the optimization and upgrading of industrial structure,resolve the problem of overcapacity and find a way to export the advantaged capacity in some industries.The ASEAN countries are not only an important seaports and way of the "21st Century Maritime Silk Road",but also have deep geographical relations,close economic ties,and great industrial complementarity with China,which naturally became the focused region of China’s international capacity cooperation.When capacity cooperation is carried out in domestic region,capacity cooperation enterprises didn’t need to concern about the exchange rate uncertainty.But when the international capacity cooperation is carried out,the exchange rate uncertainty will have an important impact on capacity cooperation.What does the impact of exchange rate uncertainty on China-ASEAN capacity cooperation is one of the questions that should be answered for the economic cooperation,especially the capacity cooperation between China and ASEAN.On the basis of the latest development of relevant literature,following the logical structure of "Question raised,Reality investigation,theoretical analysis,empirical analysis,policy revelation",this paper studies the ChinaASEAN capacity cooperation under the condition of uncertainty of exchange rate,and got some main conclusions as follows:Firstly,the change of exchange rate uncertainty indeed has an important impact on the decision of firm’s capacity cooperation.The change of exchange rate uncertainty would change the productivity threshold of commodity trade and industrial transfer corporation,which cause the change of difficulty when firm engage in capacity cooperation and then have an impact on the decision of firm’s capacity cooperation.In this process,“real rigidity” caused by sunk cost play very an important role.Secondly,the direction source of exchange rate uncertainty has an important impact on the relationship between exchange rate uncertainty and international capacity cooperation.The impact of exchange rate uncertainty on international capacity cooperation caused by foreign currency is different from the one caused by domestic currency.The increase in the volatility of the domestic money supply or the decline in the volatility of foreign money supply will increase the productivity thresholds for all type of capacity cooperation,and then reduce the profit of domestic firms’ international capacity cooperation,which making both commodity trade and industrial transfer corporation more difficult.As a result,firms need to have higher capacity productivity to be willing to engage in corresponding capacity production activities.While the increase in the volatility of foreign money supply or the decline in the volatility of domestic money supply will reduce the productivity thresholds for all type of capacity cooperation,and then increase the profit of domestic firms’ international capacity cooperation,which making both commodity trade and industrial transfer corporation easier.As a result,firms with lower productivity are willing to engage in the corresponding capacity production activities.So,when analyzing the relationship between exchange rate uncertainty and capacity uncertainty,we should not only pay attention to the level change of exchange rate uncertainty,but also concern about the direction source of the change in exchange rate uncertainty.Thirdly,as far as the impact of exchange rate uncertainty on the amount of firms’ capacity cooperation,although the change of exchange rate uncertainty has the same influential direction on the productivity threshold of commodity trade and industrial transfer cooperation,the influential degree of exchange rate uncertainty on them are different.There is a substitution effect between the commodity trade and the industrial transfer cooperation under the condition of exchange rate uncertainty,which makes the impact of exchange rate uncertainty on the amount of commodity trade and industrial transfer cooperation more complicated.As a result,the relationship between exchange rate uncertainty and international capacity cooperation are complex as well.Fourthly,from the empirical analysis of China-ASEAN capacity cooperation under the uncertainty of exchange rate,the results show that exchange rate uncertainty is negatively correlated with China’s commodity trade to ASEAN countries,so is the ASEAN countries’ commodity trade to China.The relationship between the exchange rate uncertainty and the industrial transfer cooperation from China to ASEAN countries is not significant.But the exchange rate uncertainty is positively related to the industrial transfer cooperation from ASEAN countries to China.These empirical results are consistent with the results when the level change of the exchange rate uncertainty is small and it is mainly from the RMB predicted by the theoretical model in this paper,indicating that the theoretical model of this paper has certain rationality and can be applied to explain the ChinaASEAN capacity cooperation under the uncertainty condition of exchange rate.Finally,specific to the capacity cooperation from China to ASEAN,this paper proposes some advices from the macro level,which include: promoting China’s exchange rate market reform steadily,implementing a prudent monetary policy,improving the construction of the foreign exchange market,strengthening communication and coordination with the ASEAN countries in exchange rate and monetary policy,and deepening supply-side structural reform to promote the productivity level of Chinese enterprises.From the meso level,this paper proposes some advices which include: further facilitating and making a great layout and planning for the China-ASEAN capacity cooperation.From the micro level,this paper suggests that: firms which will engage in capacity cooperation should raise the consciousness of exchange rate risk prevention,and strengthen the ability of to assess and predict exchange rate risks,last but not least,make full use of various techniques and methods to reduce the impact of the exchange rate risk.