The Influence Of Rmb Regionalization On Import And Export Trade Between China And ASEAN

With the development of China’s domestic economic and upgrading of theinternational political status, the influence of RMB in Asia is significantly enhanced.In recent years, Chinese government has introduced to settle cross-border trade withRMB and signed currency swap agreements with neighboring countries so that RMBhas further integrated into the regional economy, began to exercise a regional payment,settlement and reserve functions. Regionalization of RMB made substantial progress.ASEAN, regardless of geographic location or the economic structure of itsmember countries, is conductive to China’s trading partners. China—ASEAN FreeTrade Area also shows the willingness of the governments of China and ASEANcountries to expand bilateral economic and trade exchanges. This article attempts tobuild econometric models to analyze the influence of the regionalization of RMB onthe import and export trade of China and ASEAN countries. The main contentsinclude:1. Make clear definitions and conditions of the regionalization of RMB. Analyzethe international background of the regionalization. Review the historical path ofinternationalization of U.S. dollars, euro, yen and other currencies and contrast to ourcountry, that RMB has had the conditions of becoming a regional key currency. Fromthe macro-level analysis, on the one hand, the occurrence of the Asian financialcrisis in1997exposed the drawbacks of the Southeast Asian countries peg to thedollar exchange rate system; the other hand, the global financial tsunami in2008alsoreveals the defects of current international monetary system which dominated bydollars. Face to the macro background of financial liberalization and economicglobalization and the practical needs of the establishment of an Asian monetarysystem and the regional exchange rate coordination mechanism, is also an urgent needfor RMB as a regional key currency to take up the responsibility of “anchor” currencyto stabilize the fluctuations of the regional exchange rate.2. Discuss the close relationship between the regionalization of RMB and the reform of RMB exchange rate. First, the RMB exchange rate reform is a necessarycondition of the RMB regionalization. Only when we change the existing exchangerate formation mechanism, enhance the independence and robustness of the monetarypolicy of the Chinese government can RMB become the key currency of the Asianregional financial, trade and other fields. Second, the reform of RMB exchange rateincreases the range of fluctuations of the RMB against the U.S. dollar, the correlationof the exchange rate of yuan and the currency of neighboring countries can be used asan effective indicator to measure the degree of RMB regionalization. Some scholars inthe research in this area have yielded some results. With the help of statistical methods,we proved that the synchronization of the exchange rate fluctuations of RMB and themajor countries of ASEAN currency is growing on the international market. RMB isbecoming ‘anchor’ currency of the exchange rate in East Asia.3. Analyze the adjustments, causes and influences of the exchange rate policy inthe ASEAN countries since1970s. The analysis pointed out that ASEAN countriesneed to establish a regional joint exchange rate mechanism in the future in order tosolve the deficiencies of the existing exchange rate policy. Besides, RMB is the bestchoice of the core currency of regional joint exchange rate mechanism.4. Build econometric models to analyze the influence of RMB nominal exchangerate adjusted with correlation factors of the exchange rates of RMB and the currencyof ASEAN countries on import and export trade of China and ASEAN countries. Anduse it as the basis to measure the influence of RMB regionalization on import andexport trade between China and ASEAN countries. The empirical part of the analysisshowed that the RMB appreciation and the volatility of the nominal exchange rate areharmful to import and export trade of China and ASEAN countries. However, theimprovement of correlation between the exchange rate of RMB and the currency ofASEAN countries which lead by RMB regionalization can partially offset thisnegative impact.5. Proposed several recommendations to our government for the furtherexpansion of bilateral trade between China and ASEAN countries. Including continueto put forward the process of RMB regionalization, to promote and improve theprocess of the RMB exchange rate formation mechanism, to build up RMB returnchannels, establishing an offshore RMB market. Promote a combination of RMBregionalization and the development of China—ASEAN Free Trade Area. Make further collaboration with the exchange rate of the ASEAN countries and currencyswaps, to stabilize the bilateral exchange rate to create a good bilateral tradeenvironment between China and ASEAN.