The Influences Of Exchange Rate's Fluctuation On Import & Export Trade Of China

The paper studies the relationship between the exchange rate and international trade, based on the theory of exchange rate's trade effects, by means of qualitative methods and quantitative methods, combining Chinese empirical surveys to illustrate the influences of the exchange rate fluctuation of RMB on the foreign trade flow, trade structure and trade terms of China, thus puts forward the relative policy recommendation on the basis of the above analysis.Firstly, this paper reviews the related theories of the influences of the exchange rate fluctuation on the foreign, elaborates the short-term and long-term influences of the exchange rate fluctuation on the foreign trade, and analyses influences of the exchange rate of fluctuation of RMB from 1978 on the foreign trade in China qualitatively. Secondly, the paper adopts the yearly survey from 1985 to 2005, establishes empirical model and analyses whether the change of RMB exchange rate influences China's foreign trade flow. The empirical results show that the importing and exporting elasticity of exchange rate are inelastic and exchange rate is not the major factor which influences our country's trade flow, the appreciation of RMB doesn't reduce our country's continuous trade surplus. Thirdly, the paper analyses the influence of the change of RMB on trade structure in China. Since the opening-up, China has reformed the system of RMB exchange for several times. We can draw a conclusion by empirical analysis that the reforms have improved trade structure in our country, promoted the exporting competitive capacity of labor-intensive products. But the continual depreciation of RMB has worsened our county's trade term. The empirical results also show that trade terms in our country are related to RMB and the appreciation of RMB will improve trade terms. Finally, this paper makes comments and gives some suggestion on the basis of above analysis.