The Optimization Of Foreign Trade Structure In China During The Appreciation Of RMB

The appreciation of the RMB against the U.S. dollar has exceeded 21%, since July 21, 2005,when the reform of RMB exchange rate system started. This paper, from the perspective of optimizing the structure of foreign trade,attempts to study the positive impact of the appreciation on China's foreign trade. Using empirical and comparative methods,this paper analysed the Japanese yen exchange rate fluctuations during 1970's～1990's,and put forward suggestions on optimizing the structure of foreign trade during appreciation of RMB.This paper, based on the theory of TSC(Trade Specialization Coefficient),first analyzed the structure of foreign trade in China, pointed out that high proportion of processing trade,deteriorating terms of trade and the high proportion of overseas-funded enterprise in our exports are the main issues at present. After theoretically analyzing how the real effective exchange rate of RMB impacts on the structure of foreign merchandise trade, the paper conducted a empirical study on the reaction between them, concluding that stable cointegration are existing and the real effective exchange rate of RMB is the Granger cause to the structure of foreign merchandise trade.After analyzing how the yen's appreciation affected Japanese trade balance, terms of trade and the structure of foreign trade and drawing lessons from Japan's trade policies and the strategies of Japanese enterprises,this paper advances proposals on pushing forward the upgrading of the structure of China's trade, taking the appreciation of RMB as an opportunity: the government should maintain the development of our traditional comparative-advantage industries, promote the leading strategic industries to the achievement of competitive advantage, adjust the organizational structure of enterprises and upgrade the processing trade of China; the enterprises should develop overseas investment, transfer the export of low value-added products to domestic consumption gradually, and enhance the structure of export products.