Research On The Import Effect Of Agricultural Products Resulting From RMB Appreciation

On July 21, 2005, China broke the renminbi's peg to the dollar and replaced it with a link to a basket of currencies. Since then, the nominal effective exchange rate, the real effective exchange rate and the exchange rate of the Yuan against Dollar have all assumed to be increasing obviously. The persistence of Chinese trade surplus determines the consistent increase of RMB appreciation. RMB appreciation will inevitablely have profound effects on all aspects of Chinese economy through various channels, such as import-export of commodities and input-output of capital. Chinese agricultural exports and imports are no exception to be affected. At present, China is undertaking the dual economic transition, problems related to agriculture, rural area and farmer remain to be resolved. In this context, study on impacts of RMB appreciation on Chinese agriculture and rural area is particularly important. This study attempts to perform systematic and profound analysis on impacts of RMB appreciation on Chinese exports and imports of agricultural products, thereby state their political explanation.The paper applies Agricultural Economics, International Economics and Econometrics to build an analytical framework about the import effect of agricultural products resulting from RMB appreciation so as to systematically analyze the influence of RMB appreciation on agricultural imports. Taking monthly data from July 2005 to June 2008 as sample and seeing from aspects of the scale of agricultural imports, agricultural imports in different regions, import structure, import operator, import pattern, import source and domestic price, the paper uses the means of integration of positive and normative studies, integration of quantitative and qualitative analysis and integration of general study and case analysis to systematically analyze the influence of RMB appreciation and consumption level of Chinese residents on Chinese agricultural imports. The paper is divided into eight chapters.Chapter I is the introduction and outline of the paper, which states the research background, the scientific problems to be solved and their significance at first. Then, it defines some important concept and reviews related literature. The basic thinking, research method, technical route and the possible innovation and shortcomings are revealed at last.Chapter II is the logic base of analysis which expounds the cause of RMB appreciation from the aspect of the origin of China's trade surplus. Study shows that the coexistence of insufficiency of effective domestic demand and expansion of investment, and the conflict between supply deficiency of public goods and supply surplus of commodities are direct causes of Chinese trade surplus. In addition, the so-called demographic dividend, industrialization and urbanization in the process of dual economic transaction, distortion of local government behavior during transitional period and the inadequate supply of regulation also result in Chinese trade surplus. The persistence of Chinese trade surplus determines the consistent increase of RMB appreciation.Chapter III is the theoretical base of the study. It analyzes the factors influencing the imports of Chinese agricultural products, such as the consumption level of Chinese residents, the economic growth, the RMB exchange rate and the price of agricultural products home and abroad, thereby puts forward some implication which may need further study.Chapter IV to Chapter VII are empirical parts of the paper, which take monthly data from July 2005 to June 2008 as sample intervals to test implications attained in Chapter III.Chapter IV analyzes impacts of RMB appreciation on the scale and structure of Chinese agricultural products imports. This chapter can be divided into three parts. Based on the time series model, the first part is the empirical analysis of RMB appreciation, consumption level of Chinese residents, the price level home and abroad and their influence on the scale of Chinese agricultural products imports. The study shows that the increase of both RMB appreciation and consumption level of Chinese residents promote the growth of China's agricultural imports in a certain extent, and the influence of the former one is the most remarkable. However, the study does not prove the influence of rising price home and abroad on Chinese agricultural imports. The second part adopts panel data model to analyze different effect of RMB appreciation and the economic growth (per capita added value of industrial output) in different areas (eastern, central and western part of China) on the per capita agricultural imports of corresponding areas. The analysis shows that both RMB appreciation and per capita economic growth promote agricultural import growth of each area, and both have the most significant effect on per capita agricultural imports in western China. With the help of panel data model, the third part analyzes the impacts of RMB appreciation and rising Chinese residents' consumption level on the structure of Chinese agricultural imports. The result shows that RMB appreciation and rising consumption level of Chinese residents has promoted the import growth on Chinese livestock and plants. There is more effect on import of plants.Chapter V analyzes the influence of RMB appreciation on the operator, trade pattern and source of Chinese agricultural imports. This chapter consists three parts. Using panel data model, the impact of RMB appreciation and rising consumption level of Chinese residents on import operators is analyzed in the first part. Result shows they contribute to the growth of China's state-owned agricultural imports enterprises and foreign-invested importing agribusiness, with greater contribution to the former. Their impacts on trade pattern are discussed in the second part, which shows that RMB appreciation promoted the import growth in the form of general and processing trade model. The RMB appreciation is more beneficial to import growth in processing trade model, while the rising consumption level benefits that under general trade pattern and harm that under processing trade pattern. The third part is the empirical analysis of the impacts on import sources. The result shows that RMB appreciation stimulates agricultural imports from all continents except for Oceania. The stimulation to imports from North and South America are most remarkable. The rising consumption level promotes agricultural imports from Asia, Europe, North America and Oceania, among which the impact on imports from North America is greatest.Chapter VI takes China's soybean import and imports from the United States for example to carry on empirical analysis of RMB appreciation' s impacts on China imports of soybean and other agricultural products from USA. This chapter consists three parts. The first part takes China's soybean import as example to make regression analysis about the impact of RMB appreciation and rising consumption level on China's soybean import. The result shows a positive effect. The second part studies China's soybean import from America and uses impulse response analysis in vector auto-regressive (VAR) technology to analyze the impact. The study shows that RMB appreciation and rising consumption level stimulated the Chinese import of soybean from America. The third part takes China's imports of agricultural product from the United States to study impacts of RMB appreciation, rising consumption level of Chinese residents and price level on domestic and foreign market on the agricultural imports from the United States to China. Result shows that the increase of consumption level of price level on domestic market promotes the imports from the United States to China, and the impact of former one is greater. However, the influence of RMB appreciation and price level on foreign market can't be proved.Chapter VII applies time series model to analyze the impact of RMB appreciation on price of Chinese agricultural products on domestic market. The study shows that RMB appreciation promotes the increase of the price remarkable.Chapter VIII is conclusion of the research and thereby reveals its political implications and puts forward some countermeasures.The main innovations of the study are listed as follows.1. From the aspect of agricultural trade, current researches mainly focus on export and macro and qualitative analysis. The paper builds an analytical framework about the import effect of agricultural products resulting from RMB appreciation so as to quantitatively analyze the influence of RMB appreciation on the scale, structure, operator, pattern and source of Chinese agricultural imports, as well as domestic price of agricultural products, which has the characteristic of systematicness and perceptiveness.2. From the perspective of empirical research on factors affecting agricultural imports, most existing models are about national income and analysis of the relationship between national income and import demand. By decomposing national income, this paper sets up model to study the relationship between consumption of residents and the agricultural imports, thereby carries on quantitative research on the influence of rising consumption level of Chinese residents on Chinese agricultural imports while exchange rate changes and draw the conclusion which is instructive to the related decisions.3. From the aspect of the influence of the change of exchange rate on structure, operator, pattern and source of Chinese agricultural imports, most previous researches stay on the statistical comparative analysis and there are few references about econometric analysis. On the base of considering variable intercept and variable slope models, the paper establishes panel data model to calculate the different influence of RMB appreciation on structure, operator, pattern and source of Chinese agricultural imports and put forwards new points.