The Study On The Impact Of China’s Foreign Trade On The International Demand Of RMB

The internationalization of RMB is an important issue in the development of world economy and the reform of international monetary system.Since the pilot project of RMB cross-border settlement in 2009,the level of RMB internationalization has made significant progress.However,due to the influence of external friction and internal constraints,RMB internationalization has shown a trend of slowing down development and even retrogression of some functions after 2015.How to further promote the internationalization of RMB has become a hot issue and difficult problem for Chinese government and scholars.The core of RMB internationalization is the continuous growth of RMB international demand.However,the development of China’s foreign trade is not balanced with the international demand for RMB.China is a big trading country in the world,the trade scale and the international market share of export are the first in the world,but the internationalization level of RMB is low and the international demand is limited,which seems to be contrary to the historical experience of international currency and relevant theoretical conclusions.In order to explain the imbalance between China’s foreign trade and RMB’s international status,make up for the lack of relevant research,and put forward effective strategic suggestions on RMB internationalization,this paper aims to answer what is the mechanism of foreign trade affecting the international demand for currency? What is the impact of China’s foreign trade on the international demand for RMB? Is there any difference in the impact of foreign trade of heterogeneous industries on RMB demand?From the existing research,there are many researches on RMB internationalization,most of which refer to the research framework and viewpoints of foreign scholars on international currency,but ignore the particularity of RMB internationalization.Moreover,there are few studies focusing on the relationship between foreign trade and RMB internationalization,and even less attention and Analysis on the imbalance between China’s trade status and currency status.In the issue of trade affecting currency internationalization,most scholars attach importance to the role of overall trade scale or export in one direction,but ignore import,trade structure,competitiveness and other important issues.With the process and research development of RMB internationalization,the influence of import and trade structure has been paid more and more attention.Generally speaking,there is a lack of special,in-depth and systematic research on the impact of foreign trade on the international demand for RMB.From micro to macro level,this paper systematically and deeply analyzes the mechanism and influencing factors of foreign trade on the international demand for money,puts forward the logic of "multiplier effect" of foreign trade to create international demand for currency,scientifically measures the international demand of RMB,empirically demonstrates the influence of China’s foreign trade on the international demand of RMB,and creatively compares and analyzes heterogeneous industrial trade The difference in the pulling effect of international demand for money.In theory,this paper analyzes the impact of foreign trade on the international demand for money.Firstly,the paper constructs a trade currency selection model based on the maximization of enterprises’ interests.Based on the research of bacchetta and wincoop(2005),it analyzes the currency selection conditions in monopoly and competitive markets.It is found that factor concentration of trade products,price elasticity of demand,output elasticity of main production factors and market competitiveness are important determinants of trade currency,It is concluded that the smaller the price elasticity of demand,the greater the output elasticity of main factors of production,and the larger the share of export market,the more likely the currency pricing of exporting countries will appear.These conclusions also provide theoretical evidence for the difference of international demand for money in heterogeneous industrial trade.Then,the Mundell Fleming model is introduced into the context of currency internationalization,and the indirect influence of foreign trade on the international investment and storage function of money is analyzed in the interactive relationship among commodity market,money market and balance of payments,and the viewpoint that foreign trade has "multiplier effect" on international demand for money is put forward.Furthermore,on the basis of the mechanism study,this paper further refines and explains the internal mechanism of the influence of trade scale,trade balance and trade product differences on the international demand for money,and puts forward the important hypothesis of this paper.In the empirical study,this paper analyzes the general experience of world currency and the special case of RMB.In the study of the general experience of world currency.through the dynamic panel sys-gmm analysis of seven major world currencies,this paper empirically studies the impact of foreign trade scale,trade balance and trade product differentiation on international demand for money,and concludes that the increase of trade scale and product differentiation will significantly promote the international demand for money.At the same time,it is found that trade surplus is not conducive to the international demand which has been in the late stage of currency internationalization This indicates that the inertial effect of major world currencies,such as the US dollar,is a major obstacle to the internationalization of RMB or other currencies,and also a great interference to the international demand of other countries.In the analysis of RMB,the indirect calculation method of domestic demand deduction is used to estimate the international demand of RMB.The empirical part analyzes the impact of China’s foreign trade on the international demand for RMB.Firstly,the tvp-var model of time series data is used to analyze the three dimensions,including overall trade scale,trade balance and trade geographical concentration.The results show that: the expansion of trade scale can promote the international demand for RMB;The negative impact of trade balance(surplus)means that with the deepening of RMB internationalization,import expansion will gradually play a greater role.The impact of geographical concentration of China’s trade is negative,which means that if China’s trade is concentrated with the United States,the European Union and other major world currency issuing countries and regions,it will not be conducive to the long-term growth of international demand for RMB.After modeling and analyzing the import trade and export trade separately,similar conclusions are obtained.At the same time,under the TVP-VAR model,this paper selects three important event backgrounds: CIPS commissioning,RMB joining SDR and RMB pricing crude oil futures listing,and studies the time-varying characteristics of the impact of China’s foreign trade on RMB international demand.Then,through the inter provincial panel data of Sys-GMM empirical analysis,this paper supplements the impact analysis of trade structure upgrading,finds that trade structure upgrading significantly promotes the growth of RMB international demand,and through the comparative study of "coastal and border areas" and "non coastal and border areas",finds that there are differences in the impact of trade channels on RMB international demand in different regions.Finally,the paper subdivides the trade industry,and empirically compares the impact of China’s resource-intensive industry,labor-intensive manufacturing industry,capital intensive manufacturing industry,technology intensive manufacturing industry and knowledge-intensive service industry on the international demand of RMB from the aspects of export and import.The results show that: the effect of different industrial trade on money demand is different.Among them,the trade of resource intensive products is difficult to lead to the international demand of local currency;the expansion of labor-intensive and capital intensive manufacturing trade has a short-term promoting effect;the export of technology intensive manufacturing industry can provide more lasting impetus for the growth of RMB international demand,and the long-term growth of such imports will have a negative impact on the international demand of RMB.These conclusions show that the growth of international demand for RMB still needs the support of trade scale,the expansion of export in the initial stage is still important,and we should pay attention to import pull in the middle and late stage;we should rely on industrial upgrading to promote the trade structure and competitiveness,improve the differences of export products,so that Chinese exporters can occupy a higher bargaining position,so as to obtain more opportunities for RMB pricing and settlement The differences in the impact of quality industry trade,especially in promoting the export of technology intensive products.W also need to strengthen the construction of domestic finance and RMB offshore financial market,and help the "multiplier effect" of domestic foreign trade on the international demand of RMB.