The Empirical Analysis On The Impact Of Exchange Rate Change Of RMB On China-EU Export Tradede

As an important comprehensive evaluation index in the international economic activities, the exchange rate can produce an effect not only on the price of import and export commodities, but also on a country’s trade balance level. Since2005July, the reform of the exchange rate has begun, after that the RMB on the whole is appreciated. So it is worth to discuss if this can make Chinese export trade decline or change the Chinese trade surplus situation. While the trade between China and the Euro Area (including17member countries) has a high proportion in the total trade of China, being the largest trading partner to China followed by America and Japan China, it can represent China trade development very well. So this paper researches the impact of RMB exchange rate changes on China-EU exports.The empirical method used in this paper include the unit root test, co-integration test, error correction model and generalized impulse response function and variance decomposition, which are the base of quantitative analysis. Empirical results are as follows:Firstly, the RMB real exchange rate and nominal exchange rate against the euro both have a significant long-run equilibrium relationship with the Chinese export trade to Euro Area, but the both impacts are not significant. Secondly, in the short term, wether studying exchange rate individually or all variables jointly, RMB real exchange rate and nominal exchange rate against the euro affect the Chinese export trade to the Euro Area not significantly. Thirdly, when studying the impact of RMB real exchange rate against the euro to Chinese exports to the Euro Area, the Chinese Gross Domestic Product (GDP) affects the China-EU export trade significantly in the long-term. When studying the impact of RMB nominal exchange rate against the euro to Chinese exports to the Euro Area, the Gross Domestic Product (GDP) of the Euro Area affects the China-EU export trade significantly in the long-term. In the short term, the Chinese gross domestic product (GDP) and the Gross Domestic Product (GDP) of the Euro Area have significant effects on China-EU export trade. It also shows the Chinese Gross Domestic Product (GDP) and the Gross Domestic Product (GDP) of the Euro Area affects the China-EU export trade significantly as the result of the impulse response function and variance decomposition. Therefore the income factors can not be ignored for the China-EU export trade.Therefore, the appreciation of the RMB against the euro will not bring bad effects on the China-EU export trade. And it is bad to focus only on playing the role of exchange rate changes on trade to improve the China-EU export trade.