The Impact Of Exchange Rate Changes On Sino - German Manufacturing Industry: A Comparative Study

Manufacturing is critical to the development of a country. It is the Material basis of a country’s economy and industrial body. After the global financial crisis in 2008, China’s manufacturing exports is losing its competitive advantage gradually. Germany successfully completed the industrialization in the 19th century, and achieved industrial upgrading after World War II. Germany has maintained its manufacturing advantages. It has significant reference to the manufacturing development of China. To this end, from the angle of exchange rate, this article compared China’s and Germany’s manufacturing, refining German’s manufacturing strengths and experience in developing by applying several methods, including statistical analysis and empirical analysis.Firstly, by selecting the euro transition period from 1995 to 2005 of Germany, as well as the period after the exchange rate reform in 2005 of China, this article compared China’s and Germany’s manufacturing structure, and finds that Germany’s manufacturing structure upgraded distinctly in the five years before the Euro started, and its total manufacturing exports increased significantly in the five years after the euro started. Although the Chinese manufacturing exports continued to grow in eight years, the low-technology manufacturing exports in the total manufacturing structure accounted for too high.Secondly, through the establishment of the gravity model, this article found that themselves’and their trading partners’GDP had significant impact on China’s and Germany’s manufacturing exports. The difference is that the euro exchange rate had a significant impact on Germany’s manufacturing exports, while China’s manufacturing exports was not sensitive to the RMB exchange rate. This is most likely because the RMB exchange rate was not fully free-floating, and there is trade protection policies.Finally, this article compared the China’s and Germany’s manufacturing exports comprehensively, and recommended several policy for the development of China’s current manufacturing. This article argues that China can build the current Asian economic community similar to the European Union, and promote the conformation reform of the RMB exchange rate steadily, developing the high-tech manufacturing, etc., to deal with the increasingly fierce international competition.