Emprical Study Of China's Financial Development On Its Import & Export Trade

China's financial market has made a great development since the opening up and reform in 1978. Financial laws and regulations consummated unceasingly over the last more than 30 years. The number of banks in China has exceeded 120 in 2009, whereas the figure in 1978 was just a couple. When the four state-owned banks stood like a tripod fully, more commercial banks also obtain the development in the competition. They become the important component of bank system. The Stock market plays more and more important role in the economic development. The capitalization ratio grows from 0.02 of 1992 to 0.73 of 2009. But the bond market and the foreign exchange market are even more important in our country economic development.Foreign trade is one of the troikas drawing China's economy, demonstrating the very important function to the economic development. The total volume of trade in 1985 was 69.62 billion US dollars. In 2009, it was 2207.2 billion US dollars, which was nearly 33 times of that in 1985. However, the financial crisis in 2007 has not only affected our financial systems'healthy and stability, but also had adverse effects to the foreign trade. With this taken into consideration, this paper tries to discover the relationship between China's financial development and its international trade.Guiding by Financial Development Theories and International Economics, and adopting Econometrics methodologies, we established a model to examine the relations between financial indicators which reflect the development of China's bank system, stock market, bond market and foreign exchange market, and foreign trade indicators, such as the degree of foreign trade openness and the import-export ratio.In model 1, our real diagnosis result shows banks development can promote China's foreign trade. Under the present conditions, banks play an important role in the reassignment of social deposits, the management of risks and the appraisal of the financing project. Simultaneously, banks also have the transaction convenient characteristic. However, the stock market and bond market, although are important places of direct financing for enterprises, were newly established. Complementary systems, laws and regulations are not perfect yet, so it is unable to display the connection to fund supply and demand. Therefore, the real diagnosis result is also unable to confirm that the Stock market and the bond market may promote the foreign trade development. But the actual effective exchange rate of foreign exchange market will have the reaction to the foreign trade, because the RMB revaluation will cause our country commodity price to be relatively expensive, while the overseas commodity price to be relatively cheap, thus cause our country commodity volume of exports to reduce.In model 2, the real diagnosis examinations have actually drawn the following conclusion:Long-term, the bank and bond market's development can raise our country export rate and the import rate. Stock market's development will promote the export rate enhancement, but actually present the reaction to the import rate.Finally, we propose the policy suggestion to promote the foreign trade development from the financial angle according to the real diagnosis. First bank should seek for the survival development in the small private enterprises, provide fund by low cost to satisfy their production needs. It will not only satisfy the development demand of small and medium-sized enterprise, also realize the bank own variation management. To urge the healthy development of the stock market, we must pay more attention to consummate Stock market's legal environment, propagate stock investment knowledge, expand stock market risk's propaganda, strengthen investors'investment rationality and mature their psychology. While in the bond market, we must change the unreasonable body structure of bond and the lag pattern of the bond development step by step. Also we must separate the debenture bond and the enterprise bond, advance the pricing mechanism of the bond market positively.We must maintain the RMB's independence. The RMB revaluation can't carry out under the foreign pressure. It must base on sustainable development reality of our country industry as well as the change situation of RMB wholesale monetary exchange.