Study On The Influence Of RMB Exchange Rate Change On Industrial Structure Optimization And Upgrading Based On Chinese Data

As one of the most important price variables in the balance of international payments, the pass-through of exchange rate has a significant impact on the Economic Growth. Meanwhile, they constantly try their best to look into its depth of excavation from a variety of macro and micro perspectives, hoping to get more constructive conclusions to guide economic development. As the industrial demand structure of a country or a region determines its supply structure, which further can support their national income, the industrial structure upgrading path exists correspondence with economic growth. Thus, research about pass-through of exchange rate with a perspective of industrial structure optimizing is so significant no matter practical or theoretical ways.Since the reform of exchange rate regime in July2005, The RMB exchange rate has entered into a channel with continued appreciation, which has risen more than30%in the eight years. Then, How the fluctuation of exchange rate, especially the enhanced expectations of RMB appreciation to impact on the optimization and upgrading of industrial structure? By reading the existed papers and literatures, we find that there are different attitudes on this question. Some scholars believe that RMB appreciation is in favor of the upgrading of industrial structure adjustment, while others think that it will put China economy into a passive state, inhibiting the growth rate of development. This paper is going to study the status of industrial structure optimization and upgrading of China effected by exchange rate varying under the background of RMB appreciation since July2005and new economic development model required in the twelfth "five year", and then to explore that how China to catch the opportunities and deal with the challenges in this new economy historical periods.This paper classifies the China industrial structure following the two popular methods to study the relevance of between the exchange rate and the industrial structure. One is by the three industries, the other is Standard International Trade Classification (SITC). It has a total of six sections of the article, in accordance with a main clue of "theories mechanism analysis of relevance between exchange rate and the optimization and upgrading of industrial structure—general analysis for impact of RMB exchange rate on industrial structure—empirical analysis—conclusions and suggestions". This core clue give two perfect combinations:one is the theories of exchange rates’ pass-through effect and industry adjustments in structure, the other is the method of normative and empirical analysis. The specific content is divided into two parts mainly.The First part is the mechanism analysis for exchange rate and adjustment of industrial structure. The section introduces that the optimization of industrial structure can be expressed by its rationalization and upgrading it terms of the understanding of its meaning and specific contents and constructs the according measuring index (the smaller the better) for optimization of industrial structure. Then, by means of building the relationships of "exchange rate—CPI, FDI, Trade" and "CPI, FDI, Trade—industrial structure", we can find out the correlation between exchange rate and industrial structure impacted by the three variables "CPI, FDI, Trade". At last of this part, it is fourth verified their logical relationships in basis of profit maximization model.The second part is empirical correlation analysis of RMB exchange rate and China industrial structure adjustment and optimization. This section finds out the correlation between the two researching objects according to build a VCEM model on sample data through three levels.The empirical results shows RMB exchange rate can affect industrial structure adjustment by CPI, FDI and Trade. There exists a large difference in the influence on the index of the optimization and upgrading of industrial structure through these three paths. Firstly, there is a relationship of negative direction between the trade volume and the index of the optimization and upgrading, which means the better trade development can prompt the optimization of industrial structure. Secondly, inflation and foreign direct investment under the background of RMB appreciation has a bad effect, which can validate in some degree that China economy still is undergoing negative influence by worldwide imported inflation. However, as the import structure is shifted from consumer demand to production demand, it has a great importance for the optimization of export structure.