A Study On The Relationship Between RMB Real Effective Exchange Rate And China's Economic Growth

In the open economy, fluctuation of exchange rate has vital effect on macro-economy variables such as balance of payments, national income, price index etc. Experience from China's reform and open-up shows that each fluctuation of RMB exchange rate has different influence on the growth of national economy through the fluctuation of international trade and foreign direct investment etc. Relationship between fluctuation of RMB exchange rate and growth of economy has become one remarkable question.It is generally accepted in the foreign academy that nominal exchange rate has greater regulating influence on the capital account than on the balance of trade, and it is the real effective exchange rate that really determined the state of balance of trade. Because there are differences in the fluctuant range and the form mechanism between nominal exchange rate and real effective exchange rate, we should consider not only nominal exchange rate but also real effective exchange rate while analysing the impact of RMB appreciation or devaluation on international trade and economic growth. The research subject of this thesis is the effect of change of RMB real effective exchange rate on China's economic growth. Based on the experience and empirical analysis, this thesis has proved that there was positive relationship between devaluation of the real effective exchange rate of RMB and China's economic growth, and put forward the corresponding recommendations to the policy of exchange rate of our country.