A Research Of The Influence Of Rmb Exchange Rate Fluctuation On Eastern China's Foreign Trade

With the continuous deepening of economic globalization, international trade is playing an increasingly important role of our economic since the reform and opening-up policy been carried out. As the earliest district of carrying out the policy, the coastal areas of eastern China has been always the most intensive located place of foreign trade corporation. Export and import activities has become the fundamental force of economic growth and can even decide the path of economic development. In eastern China's economic structure, processing trade takes up the biggest proportion of foreign trade, thus leading to the change of relationship between exchange rate fluctuation and the import and export. When RMB appreciates, the relative price effect leads to export's decrease and import's increase. Under the circumstance of eastern China's trade structure, however, the decrease of export mainly comes from processing trade. The decrease of processing trade can lead to the decrease of processing trade's import. Therefore, the influence of RMB exchange rate fluctuation on the import of eastern China depends on the mixed effect of price effect and processing trade.In order to precisely reflect RMB exchange rate fluctuation, this essay chooses 19 countries as weight to calculate the RMB's real effective exchange rate. Then we choose quarterly data, which includes RMB's real effective exchange rate, Eastern China's GDP and the GDP of foreign trade partner, to build a model of import and export trade based on the theory of the imperfect substitute model. Then uses Eviews to analyze the time series data to get the estimated function. Through the research, we find out that the appreciation of RMB leads to the reduce of both import and export. At last, this essay comes up some advice such as slow down the the appreciation of RMB, accelerate industrial upgrading and improve financial markets.