The Study On Effect Of Incomplete Exchange Rate Pass-through In China's Export Trade

Based on the continuing appreciation of the RMB and China's trade surplus growth year after year, this paper will discuss the pricing mechanisms of export-enterprise, to find out incomplete exchange rate pass-through effect in China's export trade of manufacturing industry.In this paper, based on the basic theory of micro-economics and international trade, the author will make a mark up pricing model of export-enterprise, and discuss export-enterprise's advantage in competition, export commodity's dependence on international marketplace, export-enterprise's market power, to find out the cause of a variable coefficient mark up pricing model and incomplete exchange rate pass-through effect in export-enterprise.Based on theoretical analysis, the author will use the panel data of manufacturing industry, from the year of 2001 to 2009, to take the descriptive statistics of the country's export trade, and export price turns out to be relative stable. To investigate exchange rate pass-through effect, the author will build an econometric model and then take empirical research. Division of manufacturing industries to labor-intensive industries and technology-intensive industries helps to find industry differences of incomplete exchange rate pass-through effect in China's export trade.Empirical research shows that in China's manufacturing exports, there is a significant incomplete exchange rate pass-through effect and, compared to all manufacturing industries, the exchange rate pass-through coefficient is smaller in labor-intensive industries, but lager in technology-intensive industries. It turns out that export-enterprise absorbs most rate change to keep competition edge on price, and this kind of phenomenon is much more significant in labor-intensive industries.