An Empirical Research On The Relationship Between The RMB Exchange Rate And The Sino-Us Trade Balance

China and the United States are the most impressive economies in the world and have a great effect on the trend of development of world economy. The trade issues between the two countries have drawn widespread concerns of other countries around the world. In recent years, Sino-US trade situation is that both China’s trade surplus and America’s trade deficit are growing constantly. With the development of Sino-US trade, the trade friction between them increases gradually. As a result of large trade deficit, labor job opportunities in relevant industries in the United States had shrunk greatly. This has aroused bilateral trade conflicts. One of the core issues is about the RMB exchange rate. Due to expanded China’s trade surplus, the international communities have questioned whether the RMB exchange rate is undervalued. American government insists that the main reason of America’s trade deficit is that the RMB is undervalued seriously. The United States has repeatedly put pressure on China to revalue RMB in order to solve its serious trade deficit. But whether the RMB exchange rate policy is the main reason of the Sino-US trade imbalance or whether the appreciation of RMB against the U. S. dollar is the key solution, which is worth researching. To explain this question, in this paper, firstly, I established several empirical models. Secondly, I adopted those quarterly data, the research period is from the first quarter of1995to the fourth quarter of2010. Thirdly, I established VAR models and applied the Johansen Cointegration Test, the Vector Error Correction Model(VECM) and other methods of Econometrics. It has found that the long-run equilibrium relationship between Sino-US exports, imports and the real exchange rate of the RMB against the U.S. dollar is not significant by the Cointegration Test and so is Sino-US trade balance and the real exchange rate of the RMB against the U. S. dollar. It means that America putting pressure on China to appreciate RMB can’t ease America’s trade deficit very well in the long run. Then it has found that, in short run, the real exchange rate fluctuations of the RMB against the U.S. dollar would have a certain impact on Sino-US exports, imports and trade balance by Vector Error Correction Model, but this effect will disappear in a relatively short period of time, then return to the long-term equilibrium. Whether long-term effects or short-term impact of the RMB real exchange rate fluctuations can not have a greater impact on Sino-US exports, imports and trade balance. And then it verifies that America putting pressure on China to revalue its currency has another reason rather than in order to ease the trade friction. The appreciation of RMB can not reverse the status quo of imbalanced Sino-US trade, the main factors of the Sino-US trade balance are the domestic demand of America and China, domestic demand in America plays a decisive role in the Sino-US trade imbalance. Finally, the article analyzed the main reasons of the Sino-US trade imbalance and tries to give some suggestions for releasing the Sino-US trade imbalance.