Rmb Exchange Rate Reform Of China's Import And Export Trade

On the July 21, 2005, the Chinese central bank announced that the exchange rate system changed from that Chinese Yuan pegged to the US dollar to the system that the exchange rate was decided on the basis of the market demand and supply, referring to the blanket money, and fluctuate with management. In the meantime Chinese Yuan appreciated 2%. Chinese Yuan appreciated with small step. There still is the pressure of appreciation. In this background, the problem of how much the change of exchange rate of Chinese Yuan will influence the payment balance of Chinese foreign trade, where should the transformation of decision system of Chinese Yuan exchange rate, has became the important theoretical and practical issue for some long time in China.The paper using the method of qualitative analysis and quantitative analysis, The paper introduces the theories of change of exchange rate influence foreign trade, and discussed with detail David Humor's price-cash mechanism, Marshal-Lerner elasticity analysis, J-curve effect, incomplete transition, and so on. Investigates whether the demand elasticity of Chinese foreign trade commodities are consistent with the Marshal-Lerner condition, and investigates the time lagging effect of exchange rate of Chinese Yuan, and thus examines how much the change of exchange rate influence the payment balance of foreign trade. The paper discusses the exchange rate reformation of July 21, 2005, and gives positions on the transformation direction of exchange rate of Chinese Yuan. Analyzes under the conditions of the appreciation pressure of Chinese Yuan how the foreign trade business to avoid the adverse influence of exchange rate on the foreign trade, and how to make perfect the exchange rare decision system of Chinese Yuan, and enhancing the exchange rate reformation of Chinese Yuan.