Consumption And RMB Exchange Rate Issues Based On B-S Effect

Since world financial crisis in 2008, global economic entities have taken multiple steps in order to revive economy. Meanwhile, trade protectionism has also spread around the world. Far from then, China's development pattern which depends on investment and exports has faced many opportunity and challenge. In 2010, RMB exchange rate has been racking up one record after another. On the other hand, goods export environment deteriorates badly. In order to maintain our economy healthy and well-organized, promoting domestic demand is imperative. So researching RMB exchange rate and consumption issues will have great theoretical value and realistic significance. In this article, we divide consumption into two parts----traded goods consumption and non-traded goods consumption. Finally, we can find the linear relation between consumption and exchange rate. And if labor productivity of traded department is increased, real exchange rate will appreciate. Eventually it can lead to this conclusion that non-traded goods consumption drops and traded goods consumption grows. Certainly this continued phenomenon will not exert positive effect to our economy. Therefore, we must peel rough energy-intensive industries and modify the industrial structure. We should encourage non-traded department to raise scientific and technological levels, expand the non-traded goods demand, and ultimately make the economic take-off come true.