The Theories And Empirical Research Of Current Renminbi Exchange Rate And Chinese Macroeconomy

In the years 2002 and 2003, China achieved a balance of payment surplus, a greater growth rate of foreign trade and a rapid increase in foreign exchange reserve, which causes greater demand in the international society for an up valuation of Chinese RMB. All these have given rise to a discussion of exchange rate system of RMB. Under such background, the author regards it important to study the following problems: (l)whether the exchange rate of current RMB needs to change. (2)what impact the change of RMB exchange rate may have on our country's macroeconomy.Adopting a standard research approach on the former problem, the paper conducts a comparative research on the relevant economic scales of the countries with different exchange systems. Through an analysis of relevant historical incidents, by relating to the present situation in china and by refering to the view points of famous economists, the author proves that our country's exchange rate of RMB should remain stable, at the present stage.Adopting an empirical research approach to the latter problem, the paper mainly studies the impact of the change of exchange rate on China's imports and exports and on foreign direct investment(FDI), which influences the economic growth of developing countries, and which are also important factors in influencing macroeconomy. Adopting modern method of econometrics, this paper has establishedco-integration relation-long and steady relation of variable on the foundation ofstationary test, through collection the annual data and building the model according to the economic theory and on the basis of studying through experience. Through an empirical study, the conclusions we obtain are as follows:(l)our policy of improving the balance of payment through depreciation of RMB is feasible.(2) Export increases will contribute to the growth of GDP, while import increases' influence is the reverse. Nevertheless, this kind of influence will weaken with constant import increases and eventually, zero influence will be achieved.(3)The exchange rate depreciation will contribute to the increase of FDI, and an increase in the exchange rate will reduce the inflow of FDI.(4)The increase of FDI will contribute to the growth of GDP.The conclusion of the empirical research has offered strong support to theconclusion of the standard research. That is, the stability of the exchange rate of RMB at the present stage, is favorable to the development of economy of our country.The major creative achievements of the paper include:(l)This paper has supplied conclusion and proof, to the necessary conclusion and proof to the necessary conditions required to improve the balance of payment through depreciation of RMB exchange rate under indirect pricing, (elasticity approach).(2)On the basis of economic theory and experience research, the paper has set up all models needed and carried on the empirical research on relevant economic problems according to these models by utilizing the modern econometric method; (3)this paper has also done empirical research on the three conditions of whether of country can improve the balance of payment through depreciation of exchange rate.