Influence Of Appreciation Of RMB On Chinese Foreign Trade And Suggestions

The exchange rate issue is an important international financial issue that closely related to the national economy, the appreciation and devaluation of exchange rate have a significant impact on a country’s foreign trade. Before the reform and open, the government monopolized nation’s external trade, leading to the RMB exchange being out of line with trade development. But the connection between the RMB exchange and foreign trade is going to be increasingly tight after Chinese reform and open. Since January1,1994, the RMB exchange rate had achieved its unification of the country, began to implement market-based, single and managed floating exchange rate system. With the rapid development of Chinese economy and the fast growth of currency reserves, which is the result of the double surplus in international balance of payment, china endures huge stress of RMB appreciation and begins to adjust exchange rate policy actively, on July21,2005, the exchange rate formation mechanism was reformed again, which began to implement a managed floating exchange rate system that based on market supply and demand with reference to a basket of currencies for adjusting. According to the measurement of exchange rate’s rational level, the rate of RMB to U.S. dollar increased by2%to1dollar equals to8.11yuan, with a widened float range, and then the RMB exchange rate got into the channel of continuous appreciation. RMB exchange rate has appreciated by nearly30percent from the exchange rate reform in2005to2008and appreciated by nearly5percent from2010to the end of2011. The continued appreciation of RMB has a profound impact, both positive and negative, on China’s foreign trade development, including all aspects of the international balance of payments, exports, imports, prices, capital markets and industrial structure adjustment. In the current circumstance of domestic and international macro-economic, RMB will certainly keep the appreciation trend. Therefore, researching the impact of the RMB exchange rate appreciation on China’s foreign trade and seeking the corresponding countermeasures and suggestions are necessary, both from a theoretical point of view and from a policy perspective.Under the context of the continuous appreciation of RMB, this paper makes the impact of RMB appreciation on China’s foreign trade as the main line, firstly describes the background and significance of this study; and then summarizes the domestic and international documents related to the impact of the exchange rate changes on a country’s foreign trade; then reviews the process of adjustment of the RMB exchange rate policy and analyzes the situations and the reasons of the RMB appreciation, which mainly focusing on the compact of RMB appreciation on China’s foreign trade; This section directs that RMB appreciation goes against domestic macroeconomic control, traditional industry’s export, the attraction of foreign capital and the promotion of employment in the short-term, while in the long-term, it accelerates the development of foreign trade, the improvement of international payment balance, the adjustment of domestic industry structure and the internationalization of internal enterprises to a certain extent Lastly, the paper gives corresponding countermeasures and suggestions for the influence of RMB appreciation on foreign trade through two angles of macroeconomic policy and microeconomic body. Macroeconomic policy includes:i) expand internal market to reduce the reliance on other countries; ⅱ) consummate the formation mechanism of RMB exchange rate to keep a reasonable fluctuation; ⅲ) adopt the not-exchange-rate policy instead of the exchange-rate to promote foreign trade transition; ⅳ) boost the cross-border RMB settlement to push RMB internationalization. Microcosmic policy includes:ⅰ) enhance the publicity and guidance to increase the support to export enterprises; ⅱ) perfect finance serve and pay attention to SMEs financing; ⅲ) exert the function of trade associations to handle competition in international market; ⅳ) gain risk awareness to adapt the exchange rate fluctuation and against exchange rate risk; ⅴ) increase the technical content to strengthen industry competition; ⅵ) expand the international market.