| Exchange rate, as the ratio at which one currency can be converted into another currency, is an important factor which determines the competiveness of a country's products in the international market. Since July 21, 2005, China began to implement an exchange rate system which is market-based, with reference to a basket of currencies and with managed floating. RMB is no longer pegged to the dollar. Since then, RMB, appreciated against the U.S. dollar, exchange rate has been 20.8%. Moreover, After June 22, 2010, the RMB exchange rate began to rise sharply again. Furthermore, in the current international political situation, the pressure of RMB appreciation is still large. How does the appreciation of the RMB exchange rate impact on the import and export trade? A study of RMB exchange rate movements on the impact of changes in China's exports is significant, not only can help the corporation to strengthen their prevention on exchange rate risk, but also can maintain macroeconomic stability under the current situation. Zhejiang province, as a large district of China's foreign trade, accumulated total import and export for about $ 253.47 billion in 2010. Compare to 2000, the number has increased by 9.11 times, in which exports for $ 180.48 billion, the cumulative growth since 2000 has been 9.28 times. Zhejiang Province leads the Trade surplus in China 2010. Foreign trade dependence of Zhejiang is as high as 61.94%, much higher than the national average (49.47%). What kinds of impact will RMB exchange rate changes on Zhejiang Province is worthy to study.In this article we will is mainly discuss how the real effective exchange rate impact changes on import and export trade of Zhejiang Province by empirical analysis. The empirical analysis can be divided into two parts. In the first part, we will first figure out the real effective exchange rate of RMB, and then select annual import and export data of Zhejiang Province, 1985-2010, studying the impact of the real effective for total imports and total exports. As a contrast, we select data of ordinary trade and processing trade, from 1992 to 2010. Respectively, we discuss the impact of the real effective exchange rate on the ordinary trade and processing trade exports. The results we can learn from the first empirical analysis are as follows:The results show that, for the model for total exports, exports of ordinary trade , processing trade export, the real effective exchange rate elasticity of exports are: -0.371395, -0.04686, -3.85749. That is, the depreciation of real effective exchange rate will promote the export of Zhejiang Province. Considering Model of total imports, ordinary trade model, processing trade import model, the real effective exchange rate elasticity are: -0.848948, -1.511114, -0.546121. RMB appreciation would lead to reduced imports of Zhejiang Province. Besides exchange rate, some other factors also have significant influences on trade, as this thesis finds out empirically. Foreign income has some influences on export, while the impacts of domestic income on import are much higher than foreign income. The elasticity of foreign income on export is proved as 0.089294,0.127326,0.082651. The elasticity of domestic income on import is 0.424135,0.45807,0.039556. That is to say, the rise of foreign income will increase the export and the rise of domestic income will promote the import. FDI has a positive influence on trade. As to WTO, it has a significant function both on export and import, while the former larger that the latter.In the second part of empirical analysis, we discuss main ten countries or districts who dominate in bilateral trade of Zhejiang. In this article, we select the United States, Japan, Korea, Britain, Germany, France, Italy, China, Hong Kong, Taiwan, Australia and other ten countries and regions, export trade data, 1992-2010. The empirical results show that the elasticity of real exchange rate on exports could be both positive and negative, in which the United States, Britain, France, Italy, Korea, Australia is negative, the figures are: -3.040642, -0.419316, -4.310107, -0.658606, -0.766074, -0.636961. In these cases, the appreciation real exchange rate can lead to decrease the export to these countries and districts. As for Japan, Hong Kong, Taiwan, the elasticity of real exchange rates on exports are 1.925742, 4.725782, 2.912126; RMB real exchange rate appreciation will increase the export. |
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