An Empirical Study Of The RMB Exchange Rate And China’s Import And Export Trade Relations

With the opening-up and trade-dependence of China, the RMB, whose exchangerate will have an influence on the foreign trade, has been a medium in domestic andoversea trade. The U.S. debt crisis made the global economy a Great Depression，andour country’s foreign trade had also been affected. The continuous huge trade surplusand the rapid growth of foreign exchange reserves forced the RMB to face big pressureof appreciation. What’s more, the weak demand of the global market, the expanding ofthe international currency inflation and the reemergence of trade protectionism haveundoubtedly made the external environment to develop the foreign trade more complexand worse. Therefore, in the current economic environment, it is of great practicalsignificance to study RMB real exchange rate’s impact on China’s foreign trade.In this paper, we will use the data of1994-2012, and2005.08-2013.06, through theempirical research methods to study the effect of the fluctuation of real effectiveexchange rate on the foreign trade. In order to make a more convincing and targetingconclusion, in the empirical analysis, we use the ADF test, Johansen co-integration testand Granger causality test method to respectively analyze the influence of the RMB realeffective exchange rate on the trade balance and its structure.After study, we can get main conclusions as follows: firstly, the RMB real effectiveexchange rate has co-integration relationship with the total import-export volume andexport volume, but has no co-integration relationship with import volume; The RMBreal effective exchange rate has a two-way Granger cause with import-export volume.Secondly, RMB real effective exchange rate has no co-integration relationship withimport structure，neither with export trade structure. The RMB real effective exchangerate has a one-way Granger cause on the trade structure of manufactured products.The empirical analysis shows that the appreciation of the RMB will not have asignificant influence to China’s import and export trade. Therefore, we can’t regard theappreciation of the RMB is only measure to solve the problem of China’s foreign trade,we also need effective measures to improve China’s trade status, by which to insure abalanced development of China’s import and export trade. This paper also analyzes theimpact of RMB real effective exchange rate on China’s import and export trade, andcombined with the above analysis, we put forward the measures and suggestions topromote the development of China’s import and export trade is good. In addition,the United States has intended to gradually withdraw QE, and the influence it will bring tothe RMB’s real exchange rate needs further study.