Research On The Interactive Relationship Between RMB Internationalization, Exchange Rate Fluctuation And Sino-US Trade

The global financial crisis broke out in 2008,and the global currency system with the US dollar as the core revealed some problems.Countries have realized the importance of establishing a diversified international currency system and actively promoted the internationalization of their currencies.In 2009,China launched a pilot RMB settlement business for cross-border trade,and then RMB internationalization officially began.After that,the opening of the “Belt and Road” economic zone,the establishment of the BRICS Bank and the Asian Investment Bank,the establishment of multiple free trade zones,and the RMB's entry into the SDR have all accelerated the RMB internationalization.In the advancement of RMB internationalization,economic strength expressed by trade levels and currency stability expressed by exchange rate fluctuations play an indispensable role.At the same time,RMB internationalization affects trade balance and exchange rate with a certain mechanism.The accelerated internationalization of the RMB will inevitably affect the dollar's international currency status,which in turn will affect the Sino-US trade balance.In addition,after entering the 21 st century,the trade surplus between China and the United States has been increasing year by year.The United States believes that the value of the RMB is undervalued for a long time,and has taken several measures to force the RMB to appreciate,hoping to reverse the unfavorable trade situation with China.However,it is still unclear whether the exchange rate is the cause of the trade imbalance between the two countries and whether the expansion of the trade surplus will affect the exchange rate.Under the background of RMB internationalization in the period of strategic opportunity,the continuous promotion of exchange rate marketization,the continuous expansion of Sino-US trade balance and trade friction,this paper studies the interaction and connection of RMB internationalization,Sino-US trade balance and exchange rate fluctuation.This paper discusses from four aspects: theoretical introduction,variable change trend and current situation,interaction relationship and empirical test.Empirical use of the monthly data of variables from June 2011 to October 2019 to build structural vector autoregressive model.Comprehensive theoretical analysis and empirical analysis shows that: First,there is a stable relationship between RMB internationalization,exchange rate fluctuations and their expectations,and Sino-US trade balance in the long term.Second,the acceleration of RMB internationalization in the current period triggered the expectationof RMB exchange rate appreciation in the current period.However,in the long run,the increase in the internationalization of the RMB will drive the depreciation of the RMB and generate RMB depreciation expectations in the foreign exchange market.Third,exchange rate stability at a reasonable and balanced level promotes the internationalization of the RMB and the healthy development of Sino-US trade.The impact of exchange rate on Sino-US trade balance is complex.The United States blindly forcing the appreciation of the RMB does not meet the expectations of improving the Sino-US trade imbalance.Fourth,there is a positive relationship between the RMB exchange rate and the expected exchange rate in the foreign exchange market in the short term,but the stability and significance of this positive relationship have declined in the long run.Fifth,RMB internationalization and Sino-US trade balances affect each other.Sino-US trade balances expand and China's economic strength improves.In the long run,it will promote the function of RMB global trade settlement and promote RMB internationalization,but this role will not obvious in the short term.Conversely,RMB internationalization will also promote Sino-US trade development,and then promote China's foreign trade.Sixth,in the interaction of RMB internationalization,exchange rate and Sino-US trade balance,the influence of exchange rate fluctuation is dominant.At the end of the paper,policy suggestions are put forward based on theoretical analysis and empirical analysis.First,we should continue to promote the internationalization of the RMB by improving economic strength,maintaining the stability of the value of the RMB and improving the financial market.Second,we need to deepen the reform of the exchange rate system by formulating monetary policies in a reasonable way,intervening in the money market appropriately,and accelerating the construction of the foreign exchange market.Third,we should promote the transformation and upgrading of trade with the United States by optimizing the industrial structure,improving the international competitiveness of export products,and strengthening regional trade cooperation.