Empirical Study On The Foreign Exchange Exposure Of Strategic Emerging Industries In China

For taking a dominant position in the new round of global economic competition and industrial revolution,the developed countries have initiated a farreaching economic and industrial restructuring after the global financial crisis in2008.The competition in the global emerging industries,which are represented by new energy, new materials and biotechnology etc,has already been started.Under the background,Chinese government,take the development of strategic emerging industries as a medium and long-term national strategy.On September8,2010,the State Council executive meeting examined and adopted the "Decision of the State Council on Accelerating the Fostering and Development of Strategic Emerging Industries",opening to speed up the prelude to the development of China’ strategic emerging industries.Because some of China’s strategic emerging industries did not master the key and core technologies,we must accelerate the fostering and development of strategic emerging industries through the international cooperation.A new round of RMB exchange rate reform have enhanced exchange rate flexibility, Chinese strategic emerging industries will be the impact of exchange rate.Therefore,it is necessary to study the exchange rate exposure of Chinese strategic emerging industries.In this paper,first, based on the concept and classification of foreign exchange exposure,this paper describes the relevant research literature at home and abroad about the foreign exchange exposure.Second,this paper discuss the relationship between exchange rate fluctuations and the company,and introduce two measures of foreign exchange exposure.Next,the paper study the foreign exchange exposure of strategic emerging industries in china before and after a new round of RMB exchange rate reform.This section is the focus of this paper.First, in this paper,we use the Williamson(2001) model,according to China’s actual situation,this model chose the RMB against the U.S.dollar,euro and yen exchange rate.Second,monthly data are very few and will lose lots of information,so this paper use daily data.Before empirical analysis,we must do preprocessing.Third,in the paper,the time is divided into two intervals of October6,2008to June19,2010and July19,2010to November31,2011. Fourth, this paper consider multi-collinearity,serial correlation,heteroscedasticity,and other factors.Fifth, this paper study the foreign exchange exposure of China’s strategic emerging industries,and study the foreign exchange exposure of the seven emerging industries.Finally, in this paper, we study the impact of the RMB exchange rate on China’s strategic emerging industries.Through empirical study,this paper has found some conclusions:First, after a new round of RMB exchange rate reform.depreciation have positive influence on the yield of China’s strategic emerging industries,while appreciation have the opposite influence.Second, after a new round of RMB exchange rate reform,most of the Chinese companies display the most significant exposures to U.S.dollar, but the proportion of foreign exchange exposure of companies which display the significant exposures to euro has reduced.Third,in the two periods, seven emerging industries face the different foreign exchange exposure, and the exposure of seven emerging industries has changed.Fourth, after a new round of RMB exchange rate reform,regardless of the RMB appreciate or depreciate,the companies in china’s strategic emerging industries make profit or suffer losses.This paper also exists some inadequacies.For example, because of the small number of samples,this paper do not deeply study the exchange rate exposure of seven emerging industries.