The Empirical Anaiysis Of The Relationship Between Real Wage Rate,Export Structure And Trade Surplus In China

After the reform and opening-up policy, China has been achieved the economic development by leaps and bounds, the GDP growth rate is more than8%per year. As known to all, China’s economic development mainly depends on: investment, exportation and consumption; and the promotion of exports are very crucial to some extent. For a long time, domestic and foreign economists believe that the reason why China can maintain its huge trade surplus is that China has a large number of cheap labors and the RMB exchange rate is relatively low. However, with the continued development of the China’s economy, the urban and rural residents continued to improve their wages. Beside, since2005when Chinese central government has announced the reformation of the RMB exchange rate, the RMB exchange rate is also rising, but even in this case China can still maintain a relatively large trade surplus. One reason for this phenomenon is that, although the wage rate has been rising in recent years but it is still relatively low, and due to the rise of real wages, China’s export structure may has changed accordingly. So what are the relationship between real wage rate, the export structure and the trade surplus? Base on the Chinese national condition, this article use Structural VAR method under the long run restriction to export the impulse response in order to analysis the connection between these three sources. And by the study we found that, in the initial period after rising the real wage rate Chinese exports do have a more significant negative impact due to the raise of real wage rate, but this impact will be eliminated in the short run, and in the long run the equilibrium will be restored again. Next, this article further investigate the impaction of rising real wage rates to Chinese foreign trade surplus, and try to find the mechanism that how the real wage rate affect trade surplus. By selecting the data from16provinces which export the most part of China, we found that with the increase in the real wage rate, China’s export structure has also changed, tech products export have appeared to rise. It suggests that with the change of China’s export structure, China’s trade surplus can also maintain currently. This result would provide some advises to China’s foreign trade and China’s exchange policies.