Analysis On The Infulences Of Rmb Exchange Rate Changes On China's Outward Direct Investment

Under the condition of open economy, the change of exchange rate influences the flow of global capital directly and one counter's economy, especially, the size and direction of international trade and investment. Since July the 21st,2005, our country carried out its RMB exchange rate reform, and took a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies, which gave up the coinage based on solely US dollars and formed RMB regime with more flexibility. With more flexibility of RMB exchange rate, the uncertainty of the impact of fluctuation of exchange on china's economy is increasing, for example, the influence on the direct investment under capital and finance account. As a result, it has important actual significance to analyze the effect of the exchange rate fluctuation on china's outward direct investment.Based on literature review of the exchange rate and foreign direct investment, this thesis firstly analyzes some related theories of the exchange rate's change and fluctuation effect on international direct investment and tries to find the conduction mechanism. Then, with the analysis of RMB's system evolvement and the history and characteristic of china's outward direct investment, this paper educes the possible correlation between RMB exchange rate and china's outward direct investment, meanwhile, calculates the volatility of RMB real effective exchange rate by GARCH model. And then, by Co-integration test, Granger-causality test and the establishment of Error Correction Model, in succession, this thesis analyzes the influence of exchange rate on outward direct investment from four aspects: location structure, industry structure, main body structure and mode structure.The empirical study of RMB exchange rate effect on outward investment shows that, in long term, the level and fluctuation of RMB real effective exchange rate affect our country's outward direct investment, with the rise of real effective exchange rate, in another words, RMB appreciate, china's outward direct investment will increase. The more the RMB fluctuate, the less of Chinese outward direct investment. But in short term, the impact of change and fluctuation of RMB real effective exchange rate on outward direct investment is not obvious.Finally, based on empirical analysis, writer proposes some policies and suggestions for china's outward direct investment.