Research On The Impact Of The Real Effective Exchange Rate Of RMB On The Trade Balance Between My Country And Other BRICS Countries

Exchange rate is the significant lever for regulating trade expenditure in one country,and taking the responsibility of price conversion.Fluctuations in exchange rate play an important part in one country's international trade balance and domestic production and operation activities.After the reform of exchange rate of RMB in China from 1994,the changes in the exchange rate of RMB have taken a momentous role in stimulating our merchandise exports,improving our foreign trade environment and increasing the right of speech in the World's Great Powers.In the course of globalization,BRICS consisting of the five developing countries including China,Russia,Brazil,India,South Africa appear before the global political and economic arena with a new look.The five developing countries' economic gross account for about one quarter of the total world economic volume,the contribution rate to global economic growth is almost one-half.BRICS countries have gradually become models of mutual benefit and win-win for emerging economies,stimulating economic growth as well as perfecting global governance environment.Because of the complementarity in resources and industrial structure between China and the other BRICS,Russia,Brazil,India and South Africa play an important part in our country's trade contacts.In the context of the above,it makes sense to research the impact from real effective exchange rate on the trade balance from 1994 to 2016 between China and the other BRICS(Russia,India,South Africa,Brazil).This paper consists of five chapters: the first chapter is introduction,mainly introducing the paper's research background and research meaning,summary of the literatures from home and abroad,the paper's frame construction,research methods,innovation points and some drawbacks.The second chapter is the theoretical principle of exchange rate of RMB,mainly introducing the relevant concepts of exchange rate and the general theory of the impact of exchange rate change on trade balance of payments,for instance,the theory of easticities approach and the theory of absorption approach.The third chapter mainly introduces the statistical description of the impact of real effective exchange rate on the trade balance between China and the other BRICS(Russia,India,South Africa,Brazil).The first part analyses the evolution of RMB exchange rate regime.The second part analyses the changes in RMB exchange rate,on the whole,the RMB exchange rate has been stable and rising from 1994 exchange rate reform.The third part is the trade situation between China and the other BRICS.The forth part is the statistical description of the influences of the real effective exchange rate of RMB on the trade balance between China and the other BRICS.The outcome is inconsistent with the theory and uncertainty.The forth chapter is the empirical study of the impact of the real effective exchange rate on the trade balance between China and the other BRICS.Through choosing data from 1994-2016,establishing VAR model,applying stability test of time series,Johansen co-integration test,Granger causality test and impulse response function,they finally comes the conclusion: first,the real effective exchange rate of RMB and the trade balance between China and the other BRICS have a long term stable relationship,mainly due to the trade structural character between China and the other BRICS.What's more,they don not have granger causality,so the rise or fall of the real effective exchange rate of RMB can not change the trade situation between China and the other BRICS;second,the impact of the real effective exchange rate of RMB on the trade balance between China and the other BRICS don't have J-curve effect,it makes clear that time-lag effect does not exist and the real effective exchange rate of RMB has little effect on trade balance;third,Granger causality test exposes our country's real GDP is the granger cause of trade balance,the other BRICS' real GDP is the granger cause of trade balance,they all explain that the smooth and fast development is good for broaden the trade scale between China and the other BRICS.The fifth chapter states the inspiration of the trade between BRICS,providing some beneficial suggestions for comprehensively deepening the trade relationship between China and the other BRICS from our country's perspective.In view of the above,China is supposed to broaden exports to promoting economic growth and perfect development strategies positively.According to the situation of globalization,our country should make appropriate adjustments,including political strategy,financial strategy,trade strategy,and industrial strategy.BRICS should be hand in hand to seek opportunities in the challenge,create new economic growth points,e xpanding “BRICS+” cooperation,marching towards the community of human destiny.In this way,BRICS can perform more remarkable successes in the context of the next “Golden Decade”!...