The Comparison Research On Coordination Of Exchange Rate Policy And Tariff Policy Between China And America

After the accession to the World Trade Organization in2001, Chinesegovernment gradually adjust the MFN rates, provisional tax rates for one year, theagreement rates, preferential tax rates and tariff items and other projects according toWTO principles. Reducing import tariffs contributes to stimulate domesticconsumption, promote trade balance, and ease inflationary pressures, but for China’simport and export trade and enterprise, it supply with both opportunities andchallenges. Therefore, the reduction of tariff rates will greatly impact the domesticbalance of the economy. At the same time, as an important variable which is a contactof the internal and external economy, adjustment of the exchange rate policy willbecome an important means of regulating the internal and external economicequilibrium. In this context, the study of the coordination between China’s exchangerate policy and tariff policy is very necessary. In addition, the United States,as theworld’s largest economies (except EU), can we learn anything from its coordinationbetween exchange rate policy and tariff policy? This also require study seriously.With the data interval between1982and2010, this paper adopt a combination ofqualitative and quantitative analysis method, investigating the effect of coordinationbetween exchange rate policy and tariff policy from the view of internal balance andexternal balance of Chinese and American macroeconomy respectively, and bycomparison,the main conclusions found are as following: firstly, by the comparisonof the regression equations of internal and external equilibrium from China and American, we can find that the effect of the United States tariff rates and the exchangerate of the RMB against the U.S. dollar on internal and external equilibrium ofAmerican economy is greater than the effect of chinese tariff rates and the exchangerate of the RMB against the U.S. dollar on internal and external equilibrium ofchinese economy; secondly, The results of impulse response function show that theUnited States tariff rates and the exchange rate of the RMB against the U.S. dollaraffect the internal and external equilibrium of American economy more than the effectof chinese tariff rates and the exchange rate of the RMB against the U.S. dollar oninternal and external equilibrium of chinese economy; at last, the results of variancedecomposition show that the U.S. tariff rates and the exchange rate contribute more tothe internal equilibrium of American economy than what chinese tariff rates and theexchange rate contribute to internal equilibrium of chinese economy; however, theU.S. tariff rates and the exchange rate contribute less to the external equilibrium ofAmerican economy than what chinese tariff rates and the exchange rate contribute toexternal equilibrium of chinese economy.Based on the findings, the paper put up some strategic suggestions: first, give fullplay to the decisive role of the supply and demand ralation of foreign exchangemarket, and expand the range of fluctuation of the exchange rate; then.implementexchange rate policy and tariff policy at the same time, avoiding over-reliance on asingle policy; finally, adjust and improve other economic policy.