Study On The Impact Of RMB Exchange Rate’s Fluctuation On Export Trade Of Agriculture Products In Shandong Province

Exchange rate known as the ratio of two currencies, measures the price level of same commodity home and abroad. RMB exchange rate fluctuates frequently, it continued to be strong after 2005, however it began to decline in 2014, which brought great challenges on international trade, including the export of agriculture products. Shandong province is located in eastern China, adjacent to Japan and Korea, so it enjoys good location advantage, in addition, it has high rate of cultivated land and rich labor force, all of these is a big fortune for the export of the province’s agriculture products. By the end of 2013, its export volume of agriculture products has maintained the first for 14 consecutive years all over the China, playing an exemplary role to other provinces. The export not only increases the farmers’ income, but also largely promotes the economic growth in Shandong province. Obviously the research on the impact of exchange rate on the export of agriculture products has typical significance for Shandong province’s trade and development of agriculture.Through theoretical combines with empirical analysis, the thesis presents the status quo of the export of agriculture products in Shandong province based on related data from 1997 to 2013, the export volume is considerable, but the product is single and the foreign market is too concentrated, also it is heavily reliant on foreign enterprises. Then using unit root test, co-integration test and impulse response analysis, the thesis carrys on substantial evidence analysis from the aspects of quantity and structure of the export and obtains decent result. There is long-term relationship between RMB exchange rate and export of agriculture products, once the export deviated from equilibrium level, it will be modified quickly. In terms of structure, it proves the existence of co-integration relationship between primary agriculture products and RMB exchange rate, the same with processing agriculture products, however the processed are more sensitive to RMB exchange rate. Furthermore the thesis gives suggestions to improve the export of agriculture products in Shandong province, such as strengthening quality management, enhancing the products’ competitiveness, improving exporters’ specialization and organization, adjusting the product mix, exploiting more markets, in addition, the exporters should use kinds of financial instruments to avoid exchange rate risks.