RMB Real Exchange Rate And China's Economic Growth

During the resent twenty years, Chinese economy has gained the rapid growth. As a developing country, the rapid economic growth must impact the change of economic system, such as industry structure, financial system and allocation of labor. The change of real exchange rate is the most representative of the adjustable state under the background of high-speed economic growth. In order to research the relations between the Chinese economic growth and the adjustable real exchange, this paper points out these objective economic facts about exchange rate's influence on economic growth and growth's influence on exchange rate.Economic growth is always a charming subject in economics and it is very important to a developing country. Economic growth always has opposite reaction to exchange rate. During the period of rapid growth, the current account surplus and the foreign capital inflow often cause real exchange rate appreciation. But foreign capital rapid outflow caused by economy recession always gives rise to exchange rate depreciation, brings about serious money crisis and destroys economy finally. Now the exchange rate of RMB faces up to the pressure of appreciation in recent years relative to china's rapid economy growth.We analyze exchange rate changes can affect economic growth through two channels: First, exchange rate will influence the economic growth. In this aspect, we analyze the influence from two aspects. One is from the demand side. Another aspect is from the supply side. The second channel is the mechanism about growth's influence on exchange rate. We also find that growth influences exchange rate by two ways: (1)Balassa-Samuelson effect which analyzes how growth influences exchange rate from supply or long-time. (2) the H-M-K hypothesis from demand or short-time.