The Relationship Analysis Between REER Volatility And Import & Export Trade During The Period Of Reform And Openness In China

The sustained trade development is an important factor to guarantee external equilibrium and economic growth. As an important lever, exchange rate is one of significant influencing factor for one country or area international trade development. Exchange rate variation and international trade is always one hot issue of international economics, recognized by all countries. Since economic reform and open-up policy in 70th, our country has realized the importance of exchange rate. In order to adapt the needs of reform, our country do a lot of changes in exchange rate and trading systems to enhance correlation between exchange rate and international trade. Between 1981 and 1994, double exchange rates system had been converted into single rate system. As a result, the relationship between RMB rate changes and international trade becomes more and more obvious.Since a good while, studies on the relationship between China's foreign trade and REER have been only focused on that between China's trade balance and REER. It is not complete. This paper researches the relationship between China'foreign trade and REER from two aspects, one is the relationship between China'trade balance and REER, the other is the relationship between China's trade structure and REER. Through theoretic and empirical analysis ,we find that : there is no long-term steady relationship between REER and trade balance .And it gives a related explanation towards the conclusion :This is decided by our special economic structure .Then it gives a particular analysis to REER and trade structure and draws a conclusion that REER volatility can improve trade structure during the special period.