Research On Impact Of RMB Exchange Rate To China's Export Trade

It's known to all that the exchange rate impacts any country of open economy in every antenna of foreign trade. On basis of the capital market that is not open, the export not only is an important in international income and outcome, but also safeguards the international balance of payment. The RMB exchange rate is a key point that influences the export. On the moment that Japan maintained the RMB appreciation in the 7-country Conference in 2003, the US-led countries and some international organizations were asking the government to appreciate the RMB in various ways. They believe that the underestimated RMB makes China's exported goods more powerful all over the word resulting in impacting the industries in many countries. Well, whether the RMB exchange rate could influence the China's exported trade? Whether the RMB appreciation could improve the trade balance in US and Japan? It is significant in understanding these questions.This paper reviews the related theories and documents of the effect of exchange rate on trade balance. And then, this paper collects the related datum from the year of 1985 to 2005 and analyzes how the RMB exchange rate influences the China's exported trade positively. Quantitative methods include ADF Unit Root Test, Johansen Cointegration Test and Granger Causality Test. Firstly, I positively analyze the influence of the RMB exchange rate on the China's exported trade in recent 20 years. Then I study how the RMB exchange rate impacts China, US and Japan respectively.Finally, this paper makes comments on the influence of RMB exchange rate on China's export and gives some suggestion on the basis of the results of above analysis. As a result, there is a long balance between RMB exchange rate and China's export, but the RMB exchange rate has little influence on China's export. In the long run, it's not practical to improve our foreign trade only to devaluate the RMB. At the same time, it's irrational to appreciate the RMB asked by US and Japan to alter the trade deficit. Therefore, at present China should keep the RMB exchange rate that will appreciate in a short time out of pressure, keep its stability in a reasonable and balanced position, reform the molding system of RMB step by step, improve the industrial structure, and should enhance the exported goods in technical contents and additional value.