The Exchange Rate Change And Trade Balance

The paper studies the relationship between the exchange rate and trade balance, based on the theory of exchange rate'trade effects, and employing ARDL model, combining Chinese empirical survey to illustrate the influence of the real exchange rate fluctuation of RMB on the trade balance of China, thus put forward the relative policy recommendation based on the above analysis.Firstly, based on the relative theories of exchange rate and trade balance, this article analyzes the correlation between exchange rate and trade balance in the past more than 20 years, so as to evident the two factors has certain relationship. Then, from the short term and long term, I analyses the exchange rate change how to influence the trade balance. Furthermore, this article learns from the Japanese history events, and combining with China's current situation to do a comparative analysis. Secondly, to further explore, this paper adopts the monthly survey from 1986 to 2004, and establishes empirical model. I do the research to analyze whether the change of RMB exchange rate influents China's foreign trade and to what extent. Furthermore, I discuss the influence on trade structure and trade balance. The following results are as follows: Obviously, RMB exchange rate influents China's foreign trade. Under the trade surplus background, a certain rise of RMB can improve trade structure. The influence on export is greater than that on import. Therefore, in the short term the increase of RMB can decrease the trade surplus; in the long term it can improve the trade structure and industry's structure. Meanwhile, there is lag effect on the influence. Finally I give evaluation to the influence of past and current exchange rate on the trade balance, and put forward some suggestions Using the exchange rate as means of adjusting trade balance is feasible.