Asymmetric Research Of Influence The RMB Real Exchange Rate Fluctuation On China-US Trade Balance

In recent years,the constant reform of RMB exchange rate formation mechanism in China has gradually increased the liberalization of RMB exchange rate,and the fluctuation of RMB against the dollar has become more and more fluctuating.The RMB exchange rate against the US dollar has a significant impact on Sino-US trade balance.Traditional exchange rate transmission theory is that exchange rate volatility on trade balance is completely transferred.However,in the background of the multi-directional and large fluctuations in the current RMB exchange rate and the fluctuation of the trade balance between China and the United States,the policy of exchange rate adjustment based on the traditional exchange rate theory has failed.China and the United States are important trading partners,in bilateral trade between China and the United States,however,behind the rapid growth,China’s large trade surplus with the United States have lasted for a long time.This has caused an adverse effect on the domestic economy in China and the United States and the healthy development of bilateral economic and trade relations.China and the United States have been trying to find a balance between China and the United States trade balance to maintain economic and external balance,thus the Sino-US trade balance is becoming a sensitive issue.As Trump government came to its power,new trade protectionism emerge more and more frequently in the United States recently,the U.S.government seek for an appreciation of the RMB.What’s more,a special 301 survey upon China’s enterprises has started in August 2017.These incidents have made more trade frictions between China and the United States.How to make an exchange rate policy of sino-us trade balance for effective adjustment based on a new theory of exchange rate transmission,has become a pressing issue.The purpose of this study was to find the most suitable trade exchange rate theory based on the present situation of the RMB exchange rate fluctuations and Sino-US trade situation,tease out clearly the mechanism of the RMB exchange rate’s influence on the sino-us trade balance and through the empirical study concludes that the RMB exchange rate fluctuations specific impacts on the Sino-US trade balance.Eventually be able to put forward reasonable suggestions based on according,use currency tools to reach the purpose of effectively adjust the Sino-US trade balance,and take steps to reduce the difficulty of using exchange rate policy to adjust the trade balance,and better and more efficiently to promote the healthy development of Sino-US trade between the two countries.This paper takes the research methods of the combination of literature review and innovation,theory and practice,normative analysis and empirical analysis to conduct the study.First,sort and comb previous literature aiming at researching impact of every national currency exchange rate volatility to the trade balance and exchange rate transmit asymmetry,and put forward the problems need to study.Secondly,based on the exchange rate imperfectly theory,the asymmetric theory and currency exchange rate fluctuations impact mechanism on trade balance,and combined with developing status quo of the RMB exchange rate fluctuations and the US-China trade balance,conclude the asymmetric influence mechanism the RMB exchange rate fluctuations have on China-US trade balance,and come up with the issue empirical research need to research.Then,adopting the latest data,using the method such as impulse response function based on Markov regional transformation vector auto-regressive model,empirical test on the asymmetric impact RMB real exchange rate volatility have on China-US trade balance.Finally,draw a conclusion based on the analysis of the text,give the policy suggestions for adjusting the RMB exchange rate to optimize the trade balance between China and the United States in the light of the actual situation of the bilateral economic relationship.This article will divide the effect mechanism of RMB exchange rate fluctuation on China-US trade balance into asymmetric effect mechanism of RMB exchange rate fluctuations direction on China-US trade balance and the asymmetric effect mechanism of RMB exchange rate amplitude fluctuation on China-US trade balance.Under the different mechanisms,due to the discrepancy of the research subject,the monopoly power,the trade protection policy,currency of price and other factors,we can infer that the RMB exchange rate volatility has asymmetric influence on the China-US trade balance.As for the empirical test about asymmetric impact of RMB real exchange rate volatility on China-US trade balance,the empirical results show that both direction and magnitude of RMB real exchange rate fluctuations have a asymmetric impact on trade balance.In general,the effect of depreciation of the real RMB exchange rate on China-US trade balance is greater than that of appreciation.The bigger amplitude of the real exchange rate of RMB,the bigger the impact on China-US trade balance.According to theoretical analysis and empirical results,this study put forward the reform of exchange rate regulation system in China as well as lower the exchange rate regulation difficulty by non-exchange rate factors suggestions as follows:to take a more accurate exchange rate adjustment policies,to actively adjust exchange rate to promote the trade balance,to improve the exchange rate volatility diversification risk mechanism,reasonably guide market expectations of the RMB exchange rate fluctuations,to loosen restriction on the number of import and export commodities,and to encourage competition in the market actively.Due to the lack of research on the impact of exchange rate fluctuations on trade balance,this paper may have some deficiencies in theoretical analysis.In the meantime,due to the time frequency of relevant statistics is rather lower resulting in empirical study sample size of this paper is limited.In addition,according to relevant research,if effectively measure the export manufacturers’ expectations of exchange rate fluctuations is plausible,it would be better to support the thesis of this paper.