U.s. Financial Crisis Affected China's Exports Transmission Mechanism

American subprime mortgage crisis triggered a global financial crisis, which had a large negative impact on Chinese exports. China is an economy with high trade dependence. Export is still the major source of China's economic growth. Therefore, it is undoubted that declined export will result in declined economic growth. This paper is to study the transmission mechanism of American financial crisis' impact on China's exports, which is intend to seize the key variables and affected way to reduce losses in financial crisis.In this paper, the major research methods adopted include qualitative analysis and quantitative analysis, theoretical analysis and empirical analysis, etc. The paper describes the impact of the crisis on the fact that China's exports, and then analyzes and verifies the transmission mechanism, with the newest data update to Dec.2009. Firstly, a comprehensive description of the American financial crisis on China's exports, from aspects of total exports, export industries, export mode, export environment, export markets, export enterprise and so on. Secondly, a theoretical analysis on the reasons and transmission mechanism. The conclusion is:the crisis affects the RMB Exchange Rate, trading partners' National Income, trading partners' Unemployment Rate, and trading partners'Total Stock Market Value, which will correspondingly, brings the Price Effect, Income Effect, Policy Effect, and Expectation Effect. All are negative factors to China's exports. Meanwhile, this conclusion passes the empirical tests. Finally, in the last part of the paper,4 policy recommendations are proposed according to the 4 paths in the transmission mechanism.