Influence Of RMB Appreciation On The In-export Trade Between China And America

Exchange rate is the most important comprehensive price index used in international economy transaction and executes the function of regulating trade balance. From the implementation of reform and opening policy, the fluctuation of RMB exchange rate depreciation has promoted Chinese export trade and improved Chinese trade balance. The People's Bank of China( PBOC) announced that starting 21July2005,China would implement a regulated, managed floating exchange rate system based on market supply and demand and with reference to a basket of currencies. From then on, it makes RMB appreciation total to 13.46 percents by January 2008. During this period, China's trade to the United States which is our main trade partner showing a marked change, exports in February 2007 marked a turning point from the average growth rate of 29 percent down to 20.4 percent, while the speed of imports increase from March 2006 improved 1 times substantially. Based on the fact, Influence of RMB appreciation on the trade between China and America from the exchange rate reform in 2005 became the focus of this paper.This paper researched in-export trade between China and America form the exchange rate reform in 2005 as its perspective, first introduced and analyzed the related theories of the effect of changes of exchange rate on trade balance such as the price theory of elasticity, and the OLS test are applied to analyses the influence of RMB appreciation on the in-export trade of china to America based on data from June 2005 to January 2008, at the same time analyzes the causes in details. The results demonstrate that influence of RMB appreciation on the export trade of china to America is not evidence, but the situation of America economic has a serious impact of it; and because the low sensitivity of the import to exchange rate and J-curve, the import did not be promoted until nine months later. Finally, through studied the experience from the appreciation of the Japanese yen, this paper discussed the relevant suggestion on how to deal with RMB appreciation.