An Empirical Study Of RMB Exchange Rate’s Influence On Chinese Trade Balance

Since the reform and opening up, China’s economic aggregate the rapid development of China’s total GDP in2010surpassed Japan to become the second largest economy in the world. In terms of foreign trade. China’s foreign trade volume continued to grow. Total trade continued to increase at the same time, China’s trade balance has also experienced from deficit into surplus. Experience after joining the WTO transition period, China’s trade surplus increased rapidly, and in2008reached298.131billion U.S. dollars. China’s rapid economic growth and huge trade surplus caused widespread concern in the Western world. At the same time, the United States academia has become more concerned about the continuous expansion of trade deficit between China and US. the US-led Western countries believe that trade imbalance problems such as the huge trade deficit because the Chinese government is manipulating its currency, the yuan is undervalued.and to many to put pressure on the RMB exchange rate reform in China, China faces a huge yuan appreciation pressure.Based on the brief introduction of elasticity and exchange rate pass-through theory developing process, analysis of the transmission mechanism of exchange rate changes on the trade balance. This paper firstly analyzes the RMB exchange rate change on the effects of import and export, the in-depth study of the impact of the RMB exchange rate on the trade balance. Such studies can more fully reflect all aspects of the RMB exchange rate changes on the trade balance. and more rigorous. Then, a descriptive analysis of the historical evolution of China’s RMB exchange rate system and the development of Sino-US trade. In the level of empirical analysis, based on the assumption of the Sino-US trade balance, the establishment of the RMB exchange rate, the GDP of the two countries and Sino-US trade surplus with the relationship between the theoretical model. After1992to2010a total of19-year time-series data for stationarity test, cointegration, OLS regression to come to the significance of the Sino-US trade surplus on the renminbi exchange rate flexibility and its test in order to reflect the changes in RMB exchange rate the impact on Sino-US trade balance.Concluded by the theoretical and empirical research:three factors that affect Sino-US trade surplus, the U.S. domestic economic factors, the most significant, followed by economic factors in China, the RMB exchange rate impact on Sino-US trade surplus of only0.79%. Finally, the need to adapt to China’s economic and foreign trade development policy recommendations.