Study On The Depreciation Of US Dollar And Its Influence On American And Chinese Economy And Trade

With the accelerating of globalization, the international monetary dollars’ importance isgrowing. The dollar’s stability or fluctuation not only reflects the running state of UnitedStates economy, but also affects other countries’ economy, particularly the development ofChinese economy closely related to the United States’ economy. Since the21st century,American economy was shocked by the Internet bubble burst,“9·11” event, financial crisisand so on. In this context, the dollar fell into the down cycle. At the same time, Chineseeconomy was in a stage of rapid development, and it also increased the pressure on RMBappreciation from the international society. Therefore, this article probes into the influence ofthe US dollar’s depreciation on American and Chinese economy and trade from two aspectsof theory and empiricism, and it has theoretical and practical significance.Starting from the background and reasons of the depreciation of US dollar, this paperanalyzes the correlation between the depreciation of US dollar and American and Chinese therespective import and export scale, import and export commodity structure, the FDI and theCPI, by using the method of measurement measures the influence of its correspondingdirection and amplitude. It finally comes to the conclusion that: in the short term, thedepreciation of US dollar not only alleviates the U.S. trade deficit and Chinese trade surplus,but also brings the FDI inflows into the United States and China. But it contributes to theUnited States and Chinese domestic inflation. While in the long term, the dollar will notalleviate the United States trade deficit and Chinese trade surplus, and the FDI flows out theUnited States and into China. It still increases inflation in the both countries. The conclusionof this article enlightens China to improve the exchange rate mechanism, the transformationof the mode of economic growth, accelerate the process of RMB internationalization and raiseawareness of US dollar, etc. And it puts forward the recommendation that Chinesegovernment should improve the risk management mechanism, adjust its foreign exchangereserves, control effectively the government spending and taxes, and that Chinese enterprisesshould actively implement the strategy of “going-out” policy. The purpose of this paper is toguide the health and rapid development of Chinese economy, through studying on the depreciation of US dollar and its influence on American and Chinese economy and trade andgetting some enlightenments and suggestions.