The Influence Of RMB Exchange Rate Fluctuation Over Export-oriented Economy

Dated back to2005, the Exchange Rate of the Yuan continued to appreciate. According to general trading budget theory, Exchange Rate is one of main factors which will influent one country’s trading structure. The continued appreciation of the RMB Exchange Rate will have two impacts. On one hand, it will have negative influence on China’s economy, the export business will decrease; On the other hand, it is also a good opportunity for China to reform.At the very beginning, this paper proves that in the future, the RMB exchange rate will not stop increasing value until it reaches the Equilibrium Rate of Exchange. Then based on some sorting methods, such as Standard International Trade Classification, the Export-Oriented Industry is divided into several parts. Theoretical analysis and Cointegration analysis are used to see how the development of Export-Oriented industries is affected by Exchange Rate. Meanwhile, clustering methodology is also used to zoning China. China is segmented into four categories in accordance with the development level of Export-Oriented industries, which are developed areas, developing areas, less developed areas, backward areas. Some zones are selected to explain the developing gaps between different areas.Finally based on regional and industrial analysis, this paper delivered the researching results:(1) from the points of product category, with the process of the appreciation of RMB, the net export of Animals\Plants\Special Goods and related goods are affected most. It is also obvious that Resources/Manufactured goods\Medium-Tech Goods lose some net exports. The effection for Low-Tech Goods is neutral. And the appreciation of RMB even has positive effection on the net export of High-Tech goods. So from industrial angle, the fluctuation of Exchange Rate affects Low-end Industry more than High-Tech Industry.(2) In China, different regions are influenced totally differently by the appreciation of RMB. Less developed areas have the largest reactions, then developing countries follows. Thanks to Agglomeration Effect, Developed areas are not influenced too much.(3) Even in the same region, due to different industrial structures, different provinces react differently to the Fluctuation of RMB. For example, compared with Zhejiang Province and Guangdong Province, Jiangsu Province and Shanghai invest more to develop High-Tech industries, these two cities are influenced less than Zhejiang and Gudong by RMB Ratio in the past few years.