The Impact Of Exchange Rate Changes On Import And Export Trade Between China And “The Belt And Road” Countries

For more than 40 years of reform and opening up,China’s foreign trade development has achieved remarkable results.The total import and export volume of China has increased from20.64 billion U.S.dollars in 1978 to 4107.14 billion U.S.dollars in 2017,foreign trade increased by 198.99 times.China’s total import and export volume accounted for 0.79% of the world’s trade in goods,and the proportion increased to 11.50% in 2017.The “the Belt and Road” countries are an important part of China’s foreign trade.The proportion of trade between China and the countries along “the Belt and Road” has increased from 25.02% in2013 to 26.54% in 2017.The exchange rate is the most important price system in the open economy and a key factor affecting import and export trade.With the steadily advancing the reform of the RMB exchange rate formation mechanism,the volatility of the RMB exchange rate has further expanded,and China’s economic growth has entered a new normal of low growth rate.Under the new normal background,the impact of RMB exchange rate changes on import and export trade is worth studying.This paper calculates the weights of province’s import and export trade by uses the quarterly import and export trade data of 31 province-level administrative regions with the countries along “the Belt and Road” from the first quarter of 2005 to the third quarter of 2017,and has compiled the inter-provincial real effective exchange rate index.This paper studies the impact of RMB exchange rate on China’s import and export trade with the countries along“the Belt and Road” in terms of the level of RMB exchange rate changes,volatility and volatility rage.The empirical results show that,at the national level,the appreciation of the provincial real effective exchange rate has a negative impact on the import and export trade between China and the countries along “the Belt and Road”.Exchange rate fluctuations have different effects on imports and exports,but the overall impact is weak.The improvement of the economic level of the provinces and countries will play a positive role in promoting the import and export trade between China and the countries along “the Belt and Road”.At the regional level,there are differences in the impact of exchange rate changes on various regions.Specifically,in terms of import data,the impact of the provincial real effective exchange rateappreciation on the western region is greater than that in the eastern region,but on the export side,the negative effect of exchange rate appreciation on the east is greater than that in the western region.Exchange rate fluctuations have different import and export trades in various regions,but the influence is less.In terms of import data,regardless of the eastern,middle or western regions,the real GDP coefficient of each province is positive,which means that the growth of the real GDP of each province is conducive to the export trade of the countries along “the Belt and Road” to China.In terms of export data,in addition to the eastern region,the empirical results of other regions show that the real GDP of each country has a positive effect on export trade.The threshold regression results show that the expansion of exchange rate fluctuations will have a greater impact on import and export trade.Finally,the paper puts forward relevant policy recommendations based on the above research results.