Effects And Revelations Of YEN Appreciation On Japan And China Trade

Exchange rate is an important national or regional price index of foreign economic activity, It is used as an important lever to adjust a country’s trade balance. Exchange rate fluctuation affect a country’s import and export trade by changing relative price.then it affects import and export commodity structure. this article analyze direct and indirect impact of YEN appreciation on the Japan and china trade balance and the impact of the way and extent of impart.The article analyzes the theory of exchange rate effects for trade balance under the hypothesis perfect competitive market and imperfect competitive market and generalize the current research achivement outcome from three sides,pave the theoretical basis for the following analysis.later the article simplely analyzes the background of YEN appreciation and the appreciation stages, studys YEN appreciation effects to export and import amounts between Japan and china along the timeline of the two countries.then analyzes the two countries comparative products advantages,we can find the real reasons how YEN appreciation affect the two countries product structure.We use Unit root test, integration theory as well as VECM test as analysis tools to make sure to get convincing conclusions.We get conclusions: marchall-Lerner consition is not applicable to the two countries by analyzing trade data from 1985-2012, YEN exchange rate is not the key factor to affect Japanese and chinese trace balance. The two countries national income is major factor, our imcome have much more effects to bilaterial trade balance.Finally we propose relavant policy to deal with RMB appreciation maintaining independence of domestic monetory policy, implementing reasonable foreign exchange policy, speeding up to upgrade domestic industrial structure, making economics develop coordinatedly,improving domestic residents incomes level,realizing the development based on domestic demands.our country can make good use of the appreciation to fasten the speed of development by implementation of these policies.