The Area Differentiation Of Economic Growth Affected By The RMB Exchange Rate

It's different between each province in the mode of the economic development. The export-oriented economy offen affect from the exchange rate, the west and east of china will appear different when the RMB exchange rate changes. The paper will have a discussing about the intrinsic factor and future trend in development.In the theory part, the paper reviews some correlational literature, and discusses the conduction mechanism of the RMB exchange rate changes. We use the area Production Function to describe the area economic growth through structuring a two-area model. We finally find that the affect of net exports and FDI from the RMB exchange rate changes will conduct to the area economic growth, and the exchange rate will bring on a area economic difference.The paper structure a model which covers REER, area economic variable, FDI, Public Finance Expenditure, imports and exports. We will do a Panel Data analyse to the three area which include all the provinces of China.Finally, we find that the RMB exchange rate make a distinct effect to the economic growth, and economy will rise when the RMB exchange rate depreciates. The change of trade and FDI which is made by the exchange rate will depend on the opening up degree, Public Finance Expenditure, the area input-output ratio and the last GDP. The area GDP will depend on the change. The flexibility between economic growth and the exchange rate on east is greater than it on west. So when the exchange rate increase in value, the decline extent of the east economy is greater than it on west, then the economic aggregate of three areas will go to constringency.