Research On The Impact Of RMB Revaluation On The Export Trade Of China

As globalization and integration of international economy has proceed forward. The exchange rate which is one important part of international price system has won more and more attention. It connects each country together. Since 2002, under the background in US dollar exchange rate's fall incessantly, the United States, Europe and Japan has being accused China through the underestimate the rate of RMB to carry on the unfair foreign trade by the Policy of Yuan-US Dollar-Pegged Exchange Rate. Simultaneity, China has being accumulated big amount of trade surplus within 30 years because of achieving sustained economic growth these year. It cause the RMB's supply can't meet the demand. Under the double react of the interior macro-economy and international pressure, RMB is facing the biggish pressure of revaluation. From July 2005,China started to practice the new exchange rate system and RMB independently revalues 2%. Hereafter, RMB has been revaluing. At the end of 2010, an appreciation of 24% totaling compared with July 2005. Despite this it seems will keep revaluation tendency in future.Base on the traditional trade theory, if RMB's exchange rate revaluing continually, China's import and export volume will be affected certainly. Firstly, we review the classical theory of the relation between the exchange rate's fluctuation and the trade payment: Marshall-Lerner Condition and J-Curve Effect, Then we introduce the related literature of international and domestic experts and specialists. we adopt qualitative analysis and quantitative analysis to investigate the affect of export trade by the appreciation of RMB.On the part of qualitative analysis, we expatiate the argument on the appreciation of RMB and the root cause at first. Then, we collect the related data about RMB exchange rates and China export trade between 2005 and 2008. We analyze these data and found that China's export growth decrease gradually under the condition of the RMB sustained revaluation. Especially, the export trade growth lower than the import trade growth For the first time on 2008. This indicate that the anti-J-Curve Effect develop it's role on RMB revaluation. On the other side, we found that although the exchange rate between the RMB and US dollar keep stable from the 2008 financial crisis, China's export trade registered sharp negative growth, this indicate that overseas demand bear much upon our export trade. In addition, China has special form of trade, so we analyze further on Processing export trade and general export trade, and we draw a conclusion that RMB revaluation affect general export trade much than Processing export trade. On this basis, we analyze its positive influence and negative influence on export trade. Finally, we elaborate the new characteristics about China's foreign trade after the 2008 financial crisis.On the part of quantitative analysis, we construct economic model to study the degree of influence on China export trade by RMB's revaluation. According to the result of qualitative analysis, we add the overseas demand as an independent variable beside the variables export trade volume and RMB exchange rate. We adopt the real effective exchange rate as an independent variable on the model. We calculated the real effective exchange rate in 1994-2010, which is calculated depended on the proportion of Chinese trade partner's export trade in China's total export trade. As we can't collect all trading porters'economic data, so we choose the top five export trade volume countries. The exchange rate of RMB against foreign currency used the direct quotation. Overseas demand is the GDP's summary of these five countries. we use ADF Unit Root Test and Engle-Granger Co-integration Test base on these data within 1994-2010. On the basis of the above analysis, we concluded that the impact of RMB real effective exchange rate on export trade is exist but narrow, while the impact of overseas demand on export trade is significant. We use the same way to analyze the data of Processing export trade and general export trade, the result is same as the conclusion of qualitative analysis that general export trade is more sensitive to RMB's revaluation than Processing export trade.Finally, we analyze the reasons deeply and give some suggestion on the basis of above analysis.