The Empirical Analysis Of The Impact Of RMB Exchange Rate Variability On The Structure Of Export Trade In Jiangsu Province

Since the reform and opening-up, Jiangsu Province as a developed province of China give full play to its geographical advantage to develop international trade. The scale of international trade has expanded with the total sum of import and export from950million dollars in1980to338830million dollars. The total sum of international trade of Jiangsu Province is second in China, accounting for the15.4%of the total import and export of the whole country. While the scale of international trade expanded constantly, the structure of international trade has also been adjusted constantly. The export of primary products has transferred to the export of manufactured products. The share of manufactured products is98.51%in2009. In export of manufactured products, the share of export of labor-intensive products has fallen while the share of export of capital-intensive products has improved. The capital-intensive products have been the leading products in Jiangsu Province.Based on the summing up domestic and foreign research and theory, we believe that there is a certain correlation between the structure of export trade in Jiangsu Province and RMB exchange rate variability. In theory, the exchange rate affects the commodity structure of import and export trade by influencing the prices of import and export commodities. Owing to non-neutral exchange rate, the prices of different commodities have different response to exchange rate variability. So exchange rate variability has different influence on the competitive power of prices of trade. In addition, exchange rate variability also causes the cost of production variability, which leads to the different pressure of prices. So exchange rate variability has different influence on the competitive power of prices actually. This paper attempts to study the impact of RMB exchange rate variability on the structure of export trade in Jiangsu Province, and propose two hypotheses:First, the appreciation of RMB exchange rate causes the structure of exports from primary products to manufactured products in Jiangsu Province. And second, the appreciation of RMB exchange rate causes the structure of manufactured products exports from labor-intensive products to capital-intensive products.On the review of evolution of the RMB exchange rate system and the analysis of change of the structure of export trade in Jiangsu Province, we can not see the visual relationship between changes in the RMB exchange rate and the structure of export trade between of Jiangsu in the end. This paper follow to solve this problem by empirical analysis way. In the empirical analysis, this paper divide export structure of Jiangsu Province in general into primary products and manufactured products, but also further divide manufactured products into labor-intensive products and capital-intensive products, studying the impact of exchange rate variability on them respectively. This paper selects the data from1990to2009annually for20years. In the variable selection, we select the inflation-adjusted the real effective exchange rate to represent this variable exchange rate. In addition, we selected GDP and industrial value added as supplement variables for research. Based on VAR-model, we conduct unit root tests, Granger causality test, and impulse response analysis and variance decomposition. To see from the empirical results, the real effective exchange rate appreciation does result the adjustment of the structure of export trade in Jiangsu Province, and have some hysteresis. Among them, the real effective exchange rate have little effect on the export of primary products, and have a greater negative effect on labor-intensive exports, while have a positive active effect on the capital-intensive exports.Based on summing up of the whole paper, we give the following policy recommendations:First is to improve the added value of labor-intensive products; Second is to guide the development of export trade to the high-tech industries; Third is to improve awareness and capacity of the export enterprises to avoid exchange rate risk:Fourth, improve the exchange rate system.