The Effect Of Exchange Rate Movement On The Product Quality Of Chinese Export Firms

The year 2018 was the 40 th anniversary of the reform and opening up.During the past 40 years,our country's economy has experienced a rapid development stage,and the trade growth has achieved gratifying results.However,this growth is mainly based on the low-cost advantage brought by the demographic dividend.In recent years,in order to explore a reasonable and sustainable growth model for trade growth,a series of issues centered on the quality of export products have become the focus of academic research.In 2005,China implemented the reform of the RMB exchange rate.Since then,the RMB has been in a state of appreciation for a long time.Scholars have increasingly studied the intrinsic link between the appreciation of the RMB exchange rate and the product quality of export enterprises,explored the mechanism of action,and promoted the realization of structural optimization and strategic transformation of enterprises.Based on this,in the context of the continuous appreciation of the RMB exchange rate and the urgent need to increase the quality of export products,this article focuses on the following three issues based on micro-perspectives of companies and products:(1)Whether or not RMB appreciation significantly affects the quality of export products.(2)Whether there is enterprise heterogeneity in the impact.(3)Propose a possible mechanism of action: RMB exchange rate affects the average wages of enterprises,and then affects the quality of export products of enterprisesThis paper adopts the micro data of China Industrial Corporation Database and China Customs Database from 2000 to 2007,and based on previous theoretical models,empirically studies the issue that the appreciation of the RMB exchange rate affects the average wage of the enterprise,which in turn affects the product quality of the export enterprises.The study finds that there is not a single linear relationship between the appreciation of the RMB exchange rate and the quality of export products,but a significant inverted U-shaped curve.The quality of export products increases first and then decreases with the RMB exchange rate.Afterwards,according to the heterogeneity of firms,they were grouped according to their productivity,profitability,and shipment.We find that the appreciation of the RMB exchange rate had a more significant effect on the product quality of low-productivity firms,low-margin firms,and processing trade firms.The product quality impact of productivity companies and general trading companies is weak.Finally,this paper uses the mediating effect to test the mechanism of the exchange rate impact on quality,and finds that the average wage of the enterprise is the intermediary variable of the RMB exchange rate acting on the product quality,that is,the appreciation of the exchange rate raises the average wage,which in turn improves the product quality of the export enterprise.