Sino-US Trade Imbalance And RMB Exchange Rate

Sino-US trade relationship has developed rapidly in recent years. At the same time, bilateral merchandise trade imbalance is becoming the core of the controversy between China and US. This dissertation (includes five chapters) analyses the relationship between the Sino-US trade imbalance and RMB exchange rate. The conclusion is that the fluctuation of RMB exchange rate is not the cause of the trade imbalance between China and US. The internal imbalance in US is the essential cause of the trade imbalance. The appreciation of RMB exchange rate can't solve the imbalance between China and US.Chapter two reviews the course of the Sino-US trade relationship development since 1979, describes the main characteristics of the bilateral trade relationship and carries out an outlook for the development trend. Sino-US trade relationship has entered into a period of relatively more stable and rapid. The different economic structure between China and US complements each other and boosts the bilateral trade relationship. But the Sino-US trade relationship is encumbered with the ever increasing imbalance. And then analyses the origin of the Sino-US trade imbalance andits development. Sino-US trade imbalance represents the imbalance of the globe. In the bilateral trade, China exports to more than imports from US and thus has a surplus. The content of the surplus has changed: the urplus from capital and technology intensive products exceeds that from labor intensive products. The trade statistics difference is reviewed and finds that the influence of transit and value added in HK has diminished significantly.Chapter three discusses the relationship between the Sino-US trade imbalance and the exchange rate of RMB since July,21th 2005. The relationship between RMB exchange rate and China's foreign trade has strengthened increasingly since China adopted the reform and open-door policy. Empirical analysis showed that the fluctuation of RMB exchange rate has little impact on China's foreign trade balance and Sino-US trade imbalance. US's interference on China's RBM exchange rate is lack of foundations. The appreciation of RMB exchange rate can't solve the imbalance between China and US.Chapter four discusses the real reasons that cause the Sino-US trade imbalance. Since 1990's, the inward foreign direct investment has promoted the development of processing trade and become the main drive of China's foreign trade. Foreign invested enterprises mainly engaged in processing trade brought Sino-US bilateral trade imbalance problems. The restrictions against some US high-technology products export to China have deteriorated the bilateral imbalance. The internal imbalance in USis the essential cause of the bilateral trade imbalance.Chapter five Some advice and measures are provided, such as improve the export structure, properly increase the import from US, extend the outward investment and domestic demand.