Effects Of Exchange Rate Fluctuations Of The RMB Against China’s Export Commodity Structure

Since the open and reform policy, China’s foreign trade has developed rapidly, which has made a greater contribution to the rapid development of the social economy in our country. The relationship between RMB exchange rate and China’s foreign trade is becoming more and more close. Fluctuation of RMB exchange rate not only affects our country’s trade balance situation, but also promotes the change of our country export commodities structure. In the current process of stable and small appreciation of RMB, it is not enough to study the change of the total amount, which can’t reflect the influence of exchange rate changes on various product categories. Therefore, it is very necessary to study the effect of exchange rate on export commodities structure. Fluctuation of exchange rate causes change of relative prices of commodities when exported in the international market, change of the export competitiveness of export commodities, and change of demand of international market for export commodities of our country. Besides, there are other facors affecting the structure of a country’s export commodity, such as factor endowments, the domestic industrial structure, the technological level. At present, there has already been a lot of theoretical researches about these influential factors and many outstanding achievements have been attained. This paper analyzes the change of the structure of our export commodities mainly from the pesspective of fluctuation of the exchange rate. Since the reform of exchange rate system in2005, the appreciation of RMB has brought about severe impact on our import and export trades on the one side and opportunities to improve the our structure of our foreign trade on the other side. For a long time, low-tech export products with low additional value leads to our export products production enterprises at the bottom of the industrial chain in the world. Changes must be made to achieve a qualitative leap of our import and export trade.The appreciation of RMB promotes the optimization of our export commodity structure but this process should be gradual. We should draw lessons and experiences from other countries and make a series of policies according to the actual situation of our country so as to promote the smooth progress of optimizing our export commodities structure. The change of RMB real effective exchange rate exert a profound influence on the transformation and optimization of our export commodities structure.This paper mainly analyzes the relationship between the change of exchange rate and the structure of our export commodities. It can be divided into four chapters. The first chapter is introduction, including research background, the significance of this research and relevant studies domestically and abroad. The second chapter offers the theoretical framework,namely the impact of exchange rate change on the structure of export commodities. This chapter mainly manifests the exchange rate and the comparison superiority, the elastic analysis of the exchange rate, the non-neutrality of the exchange rate. It studies the effect of a country’s exchange rate changes on the export commodity structure theoretically. With the introduction of exchange rate into the theory of comparative advantage, it is concluded that fluctuation of the exchange rate will lead to change of the competitive advantage of a country’s export products. The third chapter analyzes impacts of fluctuation of the exchange rate on the structure of our export commodities. It firstly introduces the related concepts of the exchange rate and export commodity structure and their development, and then anapyzes the way that fluctuation of the RMB exchange rate affects our export commodity structure. In the empirical analysis of this paper, the author establishes the econometric model of the variables between GDP, FDI, the exchange rate and the export commodity structure according to the sample of annual data from1990to2012, based on which the author conducts granger causality analysis, impulse response analysis and variance decomposition analysis to study the causal relationship between the variables and the degree of influence between each other. Finally it is concluded that there exists one-way granger causality between the real effective exchange rate of RMB and export commodity structure. The export commodity structure is affected by fluctuations of the exchange rate, foreign direct investment and domestic economic development level. In the long run, the appreciation of RMB exchange rate has a positive impetus to the change of export commodity structure on the condition that the capital and technology factors are not restricted. The last chapter is the conclusion and relevant suggestions for future study. According to the results of theoretical analysis and empirical analysis, the author puts forward relevant suggestions for optimizing the structure of our export commodities. Specifically speaking, a fundamental change of our export product structure in foreign trades will be made by improving the technology and additional value of our export products, upgrading the industrial structure and implementing measures such as financial innovation.