Estimation Of RMB Real Effective Exchange Rate In The Background Of Global Value Chain And Its Impact On China’s Trade Balance

With the gradual improvement of economic globalization and the rapid development of vertical division of labor trade model,the global value chain trade model characterized by labor division and trade fragmentation has become the dominant mode of international division of labor.The products in the global value chain are divided into different value nodes,which are completed by enterprises scattered in different countries or regions.Under the background of global value chain,most developing countries only undertake the work of processing value-added and earn processing fees from it.However,the total value of products is calculated as the export trade volume of the country by the total value trade accounting method,which leads to a large number of repeated calculations,exaggerates the scale of real trade,and greatly affects the accuracy of trade weight,an important indicator in the calculation of effective exchange rate.At the same time,with the continuous expansion of China’s trade scale,the deepening of participation in the international trade market,the continuous improvement of the market-oriented reform of RMB exchange rate,the relationship between trade balance and exchange rate fluctuations has gradually attracted the attention of scholars.However,since processing trade is the main trade mode in China,it is an important part of the value chain.If the global value chain factor is not taken into account,there will be errors in the magnitude and direction of the impact of China’s real effective exchange rate on trade balance.Based on this,this paper uses the World Input-Output Database(WIOD)to reestimate the real effective exchange rate of China and compare it with the traditional real exchange rate,using the decomposed ratio of bilateral trade value added to China’s total trade value added as the weights of each currency in the calculation of the effective exchange rate.On this basis,the influence of real effective exchange rate on trade balance and its trend with time are studied.The paper finds that,firstly,compared with the traditional real effective exchange rate of RMB,the appreciation of the real effective exchange rate based on value chain is higher,and the existing exchange rate measurement methods underestimate the adverse impact of the appreciation of RMB exchange rate on trade balance;secondly,the depreciation of exchange rate based on value chain can not effectively stimulate export growth;while the appreciation of exchange rate will significantly worsen the trade situation and exchange rate changes.Third,with the upgrading of China’s industrial structure and the improvement of trade structure,the sensitivity of trade balance to the change of exchange rate based on value chain shows a downward trend,and the international competitiveness continues to improve.Considering the important role of China in the global value chain,this paper holds that China should consider compiling and publishing regularly the data of value added of trade between China and other countries and the real effective exchange rate considering the factors of value chain,so as to reflect more accurately the changes of trade balance and exchange rate in China;because the technological added value of processing trade is low,China’s trade status should be improved.The situation is more sensitive to the adverse impact of exchange rate fluctuation.Therefore,China should improve its trade structure,reduce its dependence on processing trade,increase the added value of export products,increase the participation of Chinese enterprises in international trade,and promote the long-term development of international trade by improving the quality of trade rather than simply accelerating the speed of trade.