RMB Against The U.S. Dollar Appreciation On China’s Garment On American Trade

The clothing industry is the traditional pillar industry in China. It has a verysignificant impact on China’s national income, export and domestic employment. Atpresent, China’s clothing exports is facing rising labor costs, raw material price gapbetween home and abroad, more and more foreign trade barriers and continuedappreciation of the RMB and other multiple pressures. But the RMB appreciation onChina’s garment export will have no negative impact is still an uncertain problem.In this paper, we analyze RMB appreciation on China’s garment on American tradefrom the two perspectives.From the perspective of elasticity, we will use the C-D functionmodel from2009to2012to calculate the elasticity of China’s clothing exports to theUnited States of America and we get the result is2.3, the appreciation of the RMB againstthe dollar would have an adverse impact on China’s clothing exports to the United States;From the exchange rate, we use VAR models and elect the quarterly data from the2000-2012and2005-2012.We get the result that there is a negative impact on China’s garmenton American trade if RMB appreciation against the dollar difference. But after the reformof exchange rate system, the impact effect of exchange rate on clothing trade balance isgreatly reduced, only0.33percentage points, is1/10before the exchange rate reform.While the RMB appreciation against the dollar in the clothing trade balance has a negativeimpact, the impact is weak; we also find that China’s clothing foreign dependency rate ishigh. After the exchange rate reform the foreign dependency rate is as high as50%; Theimpact of national income of the US and China is enhanced on China clothing tradebalance after the exchange rate reform, and separately from the original0.5and1.1percentage points to1.6and1.8percentage points, far higher than the exchange rate shockinfluence.Finally, this paper put forward suggestions for the government and enterprises. Wehope that the government can adjust the industrial structure to a higher level to promotethe upgrading of the industrial chain of clothing, and can create a favorable externalenvironment for the apparel industry; We hope that enterprises can change managementconcept from the technology and brand and can strengthen cooperation betweenenterprises, the rational allocation of resources, create more first-class brands.