The Influence Of Exchange Rate On China's Trade Structure

Trade structure is the foundation of a country's foreign trade, the alteration of trade structure is linked not only with the country's foreign trade, but also with the evolution of a country's economic. Since the beginning of the reform and opening, the foreign trade of our country has developed steadily and fast both in scale and structure. Today, as the economic globalization continues, the foreign trade of our country is engaged in a historic change: it is decreased that trade of primary products in the proportion of total trade year by year, it is raised continuously that the trade of Manufactured goods in the proportion of total trade. Improvement trade has been the main forces in Export Trade of our country especially after reforming the exchange-rate regime of 2005, profound changes is undergoing in the foreign trade structure of our country by exchange rate. It is because that exchange rate is performing the functions of price conversion in the international trade as an important comprehensive price index, which is an important part in the price system of foreign trade and linking the international prices to the domestic prices. It can also directly impacts on the balance of foreign trade and the development of foreign and domestic economic. Therefore, it is important to research the influence of exchange rate fluctuation on the foreign trade structure of our country.It is an important point of studying and discussion to the relation of exchange rate fluctuation and trade in the theorists, but it is focusing on the research of trade flows and the balance of payments. Especially the financial crisis in Asia of 1997, people are more and more interesting in the impacting of exchange rate fluctuations on trade. Many scholars at home and abroad have done a lot of research on Nominal Exchange Rate and Real Exchange Rate, but fewer on the foreign trade structure of our country. In view of this,I will analysis and research the influence of Exchange rate fluctuations on the structure of our country's foreign trade from the theoretical and empirical point of view.First, I came up with the background and significance of topics and introduced the theory of exchange rate fluctuations impacting on foreign trade, including Price - Cash flow mechanism of David·Hume, Marshall -Lerner Condition, J-curve effect and so on, which laid a theoretical foundationon for this article. I also introduced the research of experts and scholars at home and abroad.They focused the impacts on trade balance and trade flow.There are two opinions on the impacts of trade structure, one is that exchange rate will not affect the trade structure and the other is the opposite.In the second and third part, I introduced the definition, evolution, status of the trade structure and the calculation of exchange rate, and collected mass data, used graphic organizers to analysed exchange rate tendency of RMB and evolution of the trade structure.I also made an assay of mechanism on exchange rate and trade structure,coming to the conclusion that exchange rate had no influence on trade structure in the short run but done in the long run. Finally I put forward the significance of exchange rate fluctuations impacting on foreign trade and our country had the condition of trade structure upgrading.In the fouth part, centering on the RMB rate, I elaborate on this question from composition of Foreign Trade, Main structure of foreign trade and so on by theoretical and empirical methods and collecting a lot of data. I analysis the correlation of exchange rate and trade structure, building regression equation by proportion of processing trade and posted rate for ADF test. We can draw a conclusion by Engle and Granger test that exchange rate volatility and the proportion of processing trade existed co-integration,it would negative impact for proportion of processing trade if exchange rate volatility increased.In the last of this article, I suppose some questions include trade structure imbalance,awareness of risk weak and recommendations about Diversification Strategy, deepening the reform of exchange rate regime, evading the risk and so on, promoting the upgrading of the structure of trade and the economic development. The innovation of this article is real analysis of exchange rate and trade structure by exchange rate volatility and the proportion of processing trade. In view of the limited capability of mine, the data was all annual, empirical analysis was also a brief analysis. The important is that there was no Service Trade in this article, there was many works to do, which need learning and research further in future.