A Study On The Impact Of Fluctuations In The Exchange Rate Of The Euro Against The RMB On China-EU Trade

After decades of efforts,euro was finally born in 1999 and was officially put into use on Jane 1st,2002.Euro meets the demand of economic integration;it is also the result of monetary integration.It has important influence on international monetary system,but also directly weakens the dollar hegemony.Moreover,it offers the other countries with a new choice when they decide their reserve currency.In addition,euro has directly promoted economic ties between the countries of Europe,simplified the trade settlement between countries;Also promotes the international trade balance between China and European countries.Exchange rate is the ratio of one country's currency against the other,it is price of a currency measured by another currency.Euro rate against dollar experienced down,up and down turn since its birthday.Entering the 21st century,with the rapid growth of international trade between China and the Europe,trade surplus between the two sides also increased,which makes the international trade protectionism much sever,and direct confrontation over trade issues.Prompting the appreciation of the renminbi(CNY)can directly reduce international trade surplus.So it is of vital importance to explore the influence of exchange rate on trade.In this paper,based on the theories of exchange rate flexibility,we review the relevant literature and related theories,and conduct Johansen co-integration test,granger causality test and impulse response function,and also analysis china-eu bilateral trade status from 1999 to 2013.The empirical results show that:(1)the exchange rate has a stable relationship with China's international trade balance with the euro zone countries;when meeting the condition of Marshall-Lerner,CNY appreciation can improve China's international balance;(2)with the use of general pulse response function test on trade balance and the reaction of the impact on exchange rate,"J curve effect" do exist between the two nations' trade.(3)Although the currency influence the Sino-Europe trade,but the impact of European national income's on the trade balance severely beats the impact of exchange rate.According to these conclusions,this paper argues that we should promote the reform of CNY exchange rate with fully recognition of the impact of exchange rate and euro on China's trade.At the same time,we should upgrade the international competitiveness of products to improve the trade structure,so as to promote international trade,also get the voice of international trade,and to gain more advantages in the international competition and finally promote the economic development of our country.