The Impact Of The Real Effective Exchange Rate Of RMB On Chinese Economic Growth

With the improvement of opening degree and interdependency with other countries in the world, China’s economy has to confront the influence and impact from the global market. Therefore, how to balance the internal and external market and accelerate the economic growth has become a significant subject. As a link between foreign and domestic market, exchange rate has attracted considerable attention from academic economists. The conclusion which can be found is the economic growth of China is significantly affected by the fluctuation of RMB exchange rate and the influence has regional difference as well. Exchange rate fluctuation leads to external equilibrium and internal imbalance of macroeconomic simultaneously, under this circumstance, research on the regional difference of exchange rate fluctuation impacting on China economic growth is important.Taking three economic zones as research objects, this paper uses both qualitative and quantitative methods. Firstly, this paper has theoretically examined the two mechanisms of real effective exchange rate influencing on regional economic increase in China, including trade mechanism and investment mechanism. Then, based on the Keynesian macroeconomics, empirical model of how REER of RMB influence economic growth has been constructed so that the influence of exchange rate on the three Economic Zones and its regional difference can be studied empirically. The conclusions basically are:1、The appreciation of REER of RMB has obviously hindered the economic growth in the three economic zones.2、The regional difference of the influence is significant,that is,depreciation of RMB increasing regional economic development gap, enlarging asymmetric regional impact,however,appreciation of RMB decreasing the gap of development between areas. For example, when the REER of RMB fluctuates by 1%,the GDP of Yangtze River Delta change by 2.41%, Pearl River Delta 1.56% and Circum-Bohai Sea Economic Zone 0.32%.3、The trading principle of RMB REER is valid,and the change of RMB real effective exchange rate is an important factor of the Chinese import and export trading.4、The influence of RMB REER on import is more significant than on export in three economic zones. Three economic areas all conform to the Marshall Lerner condition.5、 Investment mechanism of RMB REER is valid in Circum-Bohai Sea Economic Zone,moreover,there is a reverse relationship between the exchange rate and foreign direct investment.6、In the three zones,a significant Granger causality can be found between RMB REER and exports and imports.