Study On The Impact Of RMB Exchange Rate's Fluctuation To Jiangsu's Import And Export Of Electromechanical Industry

Since the reform and opening up,China's exchange rate system has undergone many reforms.The reform of the exchange rate system in each period reflects the economic situation of China in different periods.However,with the deepening of marketization,exchange rate adjustments have become more flexible,and the RMB exchange rate fluctuations have become more frequent.As China's major import and export trade province,Jiangsu Province has maintained a high-speed growth momentum for a long time.Its electromechanical industry has occupied half of the province's import and export trade,which is of great significance to stimulating the province's economic growth.However.However,since the “Exchange rate reform” in 2005,Jiangsu's import and export of mechanical and electrical products began to fluctuate.Especially during the financial crisis in 2008,The import and export trade volume has all fallen sharply,and the decline in just one month has reached 15%-25%,in which the exchange rate fluctuation is a influencing factor that can not be ignored.Therefore,based on the more flexible exchange rate system,this thesis selects the electromechanical industry in Jiangsu Province as the research object to study the influence of exchange rate fluctuation on its import and export trade.This thesis first expounds the basic theory and transmission mechanism of exchange rate fluctuations affecting import and export trade,and reveals the general law of the impact of exchange rate fluctuations on import and export trade from the theoretical level.Using the collected data,analyzing the status of import and export trade of Jiangsu province's electromechanical industry through data charts,etc.Based on the continuous reform of the RMB exchange rate system,the AR-GARCH model is applied to measure the volatility of the RMB real effective exchange rate.Combined with the exchange rate changes and the measured exchange rate volatility,this thesis analyzes the relationship between the import and export trade of the electromechanical industry in Jiangsu Province during the corresponding period.In terms of empirical analysis,the monthly time series from 2007 to 2018 was selected as sample data,based on the C-D function form,an import trade model and an export trade mod`el including the RMB real effective exchange rate,the volatility of the RMB real effective exchange rate,Jiangsu Province's GDP and foreign weighted GDP,etc.are constructed.In the model,the E-G cointegration test was used to study the long-term equilibrium relationship.The Granger causality test was used to analyze the causal relationship and the Impulse response was used to derive short-term dynamic effects between variables.The research results show that the impact coefficient of the RMB real effective exchange rate on the import trade of the electromechanical products in Jiangsu Province is-0.7971,and the influence coefficient of the electromechanical products in Jiangsu Province is 1.7829.In the short term,the impact of exchange rate changes on import trade is less than the impact on export trade.However,the impact of exchange rate on import trade has obvious time lag effect.The RMB real effective exchange rate three months ago will have a greater positive impact on import trade than the real effective exchange rate of RMB in the current period.The increase in the volatility of RMB's real effective exchange rate has a negative impact on import and export trade,with impact coefficients of-0.3582 and-0.3459 respectively,which are in line with the expectations of economic theory.Finally,for how the Jiangsu's electromechanical industry responds to the volatility of the RMB exchange rate,this thesis proposes corresponding countermeasures and suggestions from the perspective of the government and the enterprise.The government should stabilize the exchange rate adjustment and reform system,formulate support policies and strengthen guidance services,develop foreign exchange markets and strengthen economic ties with developed countries such as Japan and Europe.Enterprises should strengthen cost control,use financial instruments effectively and improve their international competitiveness.