The Empirical Study Of Impact Of Rmb Exchange Rate Volatility On Jiangxi’s Foreign Trade After The Second Exchange Rate Reform

Since the RMB exchange rate reform in2005, the pace of RMB appreciation is gradually accelerating and two-way exchange rate volatility is gradually expanding. Since2005, the foreign trade of Jiangxi has obtained the rapid development, especially in2011, Jiangxi Province’s foreign trade has created a new record, the total volume of import and export reached$31.56billion, an increase of46.1%. Exports is21.88billion dollars, an increase of63.1percent,42.8percentage points higher than the national average growth rate, export scale ranks first in the Central, export growth ranks third in the country. Foreign trade has become an important engine of rapid economic development in Jiangxi Province.RMB appreciation and exchange rate fluctuations will affect the Jiangxi Province’s foreign trade, how RMB appreciation and exchange rate fluctuations affect foreign trade in Jiangxi Province? How they affect the import and export of the different industries? Against such background, the government should take what kind of policies and measures? Based on these questions, studies of RMB exchange rate changes impact on Jiangxi’s import and export have great realistic value.Basing on the international trade theory and Jiangxi’import and export, this article based on the Hooper and Kohlhagen’s model in the import and export, constructing the new import and export equilibrium equations to cointegration analysis, by introducing the real effective exchange rate and its volatility, foreign direct investment as new variables, and different types of imports (exports) as a variable also added to the export (import) model, to reflect the form of trade in Jiangxi Province gradually shift to the processing trade by the general trade characteristics. And established a VAR or VECM model to Impulse response analysis and variance decomposition. This dissertation chooses GARCH model which is reasonable to measure the volatility of exchange rates.Finally the conclusion is:(1) Overall, the appreciation of the RMB exchange rate fluctuations increase will promote the increase of the total trade, but it will make the trade balance tend to deteriorate, and the exchange rate and its volatility is not the main factor of changes in import and export volume of Jiangxi Province:(2) The impact of exchange rate fluctuations on different products is different. Appreciation of the RMB is not conducive to the export of low value-added, low-tech primary products and labor-intensive products, but conducive to the import and export of hi-tech products. However, increase of exchange rate fluctuations has the opposite impact on RMB appreciation. Therefore, the appreciation of the RMB is conducive to the transformation and upgrading of foreign trade enterprises in Jiangxi Province, but increase in exchange rate fluctuations adversely affect the healthy economic development in Jiangxi Province.(3) Other factors have a greater impact on the Jiangxi’s Foreign Trade. Increase of the trading partner country’s income level or Jiangxi’s income level are equally effective in promoting high-tech products trade. Furthermore, the impact of foreign direct investment for products is a more important factors, increase in foreign direct investment can contribute to the primary products and labor-intensive exports, but inhibit the import and export of capital and technology-intensive products, so foreign direct investment will pose a threat to the reasonable adjustment of foreign trade structure of Jiangxi Province.