The Impact Of RMB Exchange Rate Fluctuation On China's Employment

The updated data from Chinese Foreign Exchange Center show that central parity rate of RMB/USD reaches 6.5580 on 25th, Mar. up to 45 basis point and it is the second time to break the gate of 6.56. This is the third time to reach to a new high level since foreign exchange reform. The similar information about the appreciation of the RMB is frequent during the last year since the financial crisis. Since 2003, china's interest rate and exchange rate becomes the main target which the Western nations blame and pressure China。The foreign exchange reform and the ceaseless appreciation of the RMB in 2005 make this kind of blaming stop for a while, but after the financial crisis, the pressure is back again. Obama, the president of the United States appeal to China to step into the further mechanism with which the exchange rate is guarded by the market in Mar. of 2010, and then hundreds of congressmen jointly signed and blamed the Chinese government intervention on currency market.The work of this article is to research the impact of RMB appreciation on employment. We base on the article and analysis home and abroad about the influence of exchange rate on the employment, and secondly we practically analyze the influence of the appreciation of the RMB on the employment of China combing the Chinese situation, thirdly we make a brief introduction and a statistical analysis about the exchange rate and the correlative tendency of employment, fourthly, in order to know more clearly the influence levels of the appreciation of the RMB on the employment of all the provinces, we use the panel data from the year of 1993—2009 of all provinces using the way of Residual substitution method, and estimate the influence of the three channels concerning export channel, the channel of allocation of resources and the efficiency channel.The main conclusions of this article:1. According to the empirical analysis of part 4.we find that the general direction and degree of the influence of the real effective exchange rate of RMB on the employment is different in different provinces. That is related to the geographical position, economy development, industrial structure, floating employment and the resource of employed people. In the eastern coastal area with rapid development, the real effective exchange rate of RMB influences the employment obviously, while in the far inland areas such as Ningxia, Guizhou province, etc. it is affected lesser for the reason of the development and single industry structure2. For these reasons, it makes the direction and degree of the real effective exchange rate of RMB which influences on the employment through all ways of all the provinces unified, and of course the deep reason needs more research.3. Through analyzing the results above, we find that the real effective exchange rate of RMB influences on the employment differently by three different ways and produces influences in various proportions. So during the analysis of the influence of the real effective exchange rate of RMB on the employment, we can not judge the influence is more or less, active or negative, but should take all the factors into account such as the specific province, inshore or inland, eastern or western, rapid development in financial industry or in Manufacturing industry.The characteristics of this article:1. During the analysis of transmission channels, I take a further derivation to divide real exports into those from foreign-funded firms and domestic real exports, divide export ratios into those realized respectively by the Chinese enterprises and the foreign-funded ones.2. When I analyze the influence of the appreciation of the RMB on the employment, we do not consider the influence of the RMB on the employment over the whole China, which has been done by many people, either choose to analyze the employment structure in whole China, but choose another perspective and analyze the different influences of the appreciation of the RMB in different provinces. The difference between the east, the middle and the west results in different professions and directions. There is a great deal of difference in foreign trade between inshore and inland, so in my opinion, it is necessary to analyze the influence of the exchange rate on the employment and it also can be proved through the conclusions.