A Research On The Influence Of Euro Exchange Rate On Sino-german Trade

Euro is the milestone of the process of The European Union economicintegration. Having experienced many tests, Euro, which appeared in January1999, plays an important role in the stage of world economics and finance. Asone of the first countries to join the Euro zone, Germany is the largesteconomy in Europe. Germany is China’s biggest trading partner in Europe, atthe meantime; China is Germany’s biggest trading partner in Asia. China andGermany both are export trade countries, so Sino-German trade has broughtpositive effects not only to these two countries, but also to the whole world.The exchange rate is the price of one country in terms of another. Thefluctuation of exchange rate will affect other macro economic variables, andthe factors influencing exchange rate itself are comprehensive and complex.In international trade, countries with different currencies are inevitably affectedby exchange rate when they settled. The relationship between exchange rateand trade has always been a hotspot for scholars both at home and abroad.The exchange rate between Euro and RMB has fluctuated a lot in the lastthirteen years. The fluctuation of exchange rate even affects other economicindicators after the reform of RMB. Under the negative influence of thefinancial crisis and the European debt crisis, Sino-German trade volume isincreasing instead of decreasing.This paper applies the method of combing the theory analysis and empiricaltest to elaborate on the relationship between Euro exchange rate andSino-German trade. The paper is divided into five parts. The first part isintroduction. It expounds the background and significance of topic selection,synthesizes academic literatures about exchange rates and trade at home and abroad, and puts forward reviews. The second part describes the developmentprocess and characteristics of Sino-German trade. It divides the period from1949till now into five stages, according to the characteristics of differentstages, and expounds different stages separately. The third part analyzes thereason of Euro exchange rate fluctuation. This part observes the variationtrend of Euro in two aspects--the exchange rate of Euro against the dollar andthe exchange rate of Euro against RMB--and analyzes the reason offluctuation in different stages, combing with actual economic background andmonetary policy. The fourth part researches the influence of Euro exchangerate on Sino-German trade. This part uses theoretical analysis at first, andthen does empirical analysis with the method of the error correction model,granger causality test and impulse response function to conclude theempirical results. According to the above analysis, the sixth part summarizesthe argument and puts forward the corresponding policy suggestions.