Study On The Interaction Of RMB Exchange Rate And Foreign Trade Of China

From the RMB exchange rate system reform on July 21st 2005 to July 21st 2009 , the RMB appreciation verse US dollar reached 21.1%. From the RMB exchange rate system reform on July 21st 2005 to September 2008, the exchange rate of RMB-US dollar had been a sustained appreciation trend. During that time, there were two factors contribute to the RMB appreciation: one is the internal economic imbalances due to the rapid growth of trade sector verse non-trade sector; the other is the internal and external imbalance caused by the huge surplus of foreign trade. Although since September 2008, the exchange rate of RMB-US dollar has been stable, the RMB still faced with pressure of appreciation. There are two reasons. Firstly, the internal and external imbalance has been serious. Foreign exchange reserves of China have been more than 2 trillion U.S. dollars, which has been the grate pressure of appreciation of RMB. Secondly, devaluation expectations on US dollar exist. The economic of United States has not recovered from the financial crisis that erupted in 2008 and evolved into a global financial crisis. Depreciation of US dollar continues to exist.This article analyzes the what is the direct and indirect influence on import and export trade , which is caused by the appreciation of exchange rate of RMB -U.S. dollar. From what has been discussed the author argue that the RMB appreciation verse US dollar has not and can not change the imbalance of import and export trade of China, indeed, there are much more bad influence to the import and export trade and the whole economic of China. Finally, the author draw a conclusion and give a number of advices to government to control appreciation verse US dollar reasonably.The paper can be divided into five parts: the first part indicates the theory on the relationship between exchange rate and import and export trade and studies of scholars in China about it; the second part reviewed the development of RMB exchange rate system and the progress of RMB appreciation verse US; the third part analyzes the influence on foreign trade of China caused by appreciation RMB verse US dollar; the forth parts analyzes trade surplus rationally; the last part summarizes the paper and gives several relevent advices.