The Empirical Analysis Of The Impact Of The European Sovereign Debt Crisis On The Export From China To The Euro Area

The European Sovereign Debt Crisis has been influencing the economy of Europe itself and the world greatly. The people worldwide have been noticing the problems caused by the imbalance of the current accounts of the Euro Zone member states, the lack of effective monetary policies of the Euro area, and the lack of productive economy in Europe. In the meantime, China has to pay more attention to the trade between Europe and China since the European Union is the biggest trade partner of China. This article analyzes three main aspects that the European Sovereign Debt Crisis may affect the export from China to the Euro area.First, the crisis hurt the economy of the Euro area and the world, thus reducing their demand for Chinese products. Second, the crisis may affect the price index of the Euro area, thus affecting their demand for Chinese products. Last but not the least, the depreciation of Euro and the appreciation of RMB after the crisis is influencing the export from China to the Euro area.The article uses the VAR model, together with the Johansen co-integration test, the Granger causality test and the impulse response function to make two periods of empirical tests of the export from China to the Euro area. One is from February,1999 to September,2009, which is before the crisis broke out. The other is from October, 2009 to December,2012, which is after the crisis broke out. The results show that the export from China to the Euro area is influenced by the exchange rate between Euro and RMB, the price index of the Euro area (HICP), and the Industrial Production Index (IPI) of the Euro area. Before the crisis broke out, the impulse of IPI was most effective in the first 4 months. Then is the influence by HICP during the fourth and sixth months. Later, the export was most influenced by the exchange rate between RMB and euro. After the outburst of the crisis, the level of IPI has become the most effective factor of the export from China to the Euro area. The influence of the exchange rate and the price index decreases. The article uses IPI as GDP to present the level of macroeconomics of the Euro area. Since the real economy of Europe is lack of productivity, the growth rate of GDP is the most important sign of the recovery of the economy of Europe. We can believe that the European Sovereign Debt Crisis has influenced the macroeconomics of the Euro area, and the trade relationship between China and the Euro area will improve after the recovery of the economy of Europe.In the end, the article presents some advices for the Chinese government to improve the trade relationship between China and Europe.