The Influence Of The Rmb Exchange Rate Changes On China's Trade Balance And Countermeasures

Exchange rate is the most important comprehensive price index used ininternational economy transaction and executes the function of transforming price. Soit becomes the most important lever of regulating trade balance. Therefore manycountries take exchange rate as an adjustment instrument in order to regulate tradebalance. The effect of exchange rate is more and more apparent. Analyzing economiceffect of exchange rate fluctuation is an important research subject of internationaleconomics and macro economics. Because of the explosion of Southeast Asianfinancial crisis and accelerating economic growth in China under the background ofinternational unbalance，the trade surplus and foreign exchange reserve had beenincreasing since our exchange reform in1994， which exerted depreciation andappreciation pressure on RMB. Finally, we carried out exchange rate reform again inJuly2005for a manageable floating exchange rate mechanism，referring to currencybasket and based on market supply and demand RMB exchange rate is in persistentincrease since2005.Exchange rate is an important synthetic index for a countryparticipating in international economic activity, for exchange rate fluctuation willdirectly influence the trade balance, relating industry development and macroeconomic growth. The political circles and academia all pay great attention to theseproblems.The article evaluates the related influences of RMB’s exchange rate fluctuationon Chinese foreign trade in both theoretical and empirical angles. I divide this articleinto three chapters.Chapter I is the theory analysis of the influences of the exchange ratefluctuations on foreign trade. Firstly, it analyses the main trade theory approach, andthen focuses on Marshall-Lerner Condition and J-curve effects. On this basis, it givesthe introduction and assessment of the domestic and foreign research results in thisfield and related literature.In the second chapter, a new REER index is constructed, and has an empiricalresearch by some quantitative methods of ordinary least squares. This chapter reviewsall the Chinese stages that how the adjustment of exchange rate influence foreigntrade on the basis of the theory analysis, and compare the actual data of import andexport trade volume and REER from1994to2010to observe and the import andexport movements caused by the increase of RMB exchange rate.In the third Chapter, the article makes comments and gives some suggestions onthe basis of above analysis and the International Economics and trade part of theTwelfth Five-Year Plan.