Evaluation Of Export-oriented Industrial Hollowing Out Phenomenon From The Perspective Of RMB Appreciation

In recent years， especially since the financial crisis， the pressure ofexport-oriented industry in China increased sharply. On the one hand，the overseasdemands as well as the appreciation of RMB have negative effect on the internal andexternal financial ability of export-oriented enterprises. Export products from Chinaare at the low end of the international industrial chain. The pricing power is weak sothat it is difficult to absorb the increasing cost by raising prices. Therefore thedeclining profits and even serious losses result in a decrease of the internal financing.At the same time，the appreciation of RMB and other factors lead to the outflow offoreign investments，which make the situation worse. On the other hand，more andmore export-oriented enterprises intend to put their money into the real estate marketand capital market，such as the stock market and usury market. The result is that GDPgrowth，investment and employment decline in parts of the export-oriented areas inChina and parts of export-oriented industries. If it keeps going on like this，China willface the hollowing-out crisis that happened in Japan and the United States. Based onthe perspective of RMB appreciation， this paper will analyze the causes ofexport-oriented industrial hollowing out since China’s economic development is ofimportant theoretical and realistic significance.This paper draws the conclusion from the related literature at home and abroad inthe perspective of the definition of industrial hollowing out，its causes，hazards，metrics，such as numerical analysis. And it demonstrates the point from the followingaspects:First of all，it defines the research object of this paper. After defining the researchof export-oriented industry， we choose nine export-oriented regions from allprovinces， municipalities and autonomous regions in China， and sevenexport-oriented industries from all of manufacturing industry as the specimen in orderto make the study more specific and clear. Then we use six quantitative indicators andtake the first index as an example to show the specific meaning of index trendsthrough mathematical method (see the appendix A-G).On this basis，by combiningwith our country specific economic data，we calculate the hollowing out index of thenine export-oriented areas and the seven export-oriented industry from2000to2011calendar year，analyzes the trends of12years. In addition，in order to investigatedifferent size and different types of enterprises in different areas and the degree ofexport-oriented industry hollowing out，we separately calculated the hollowing out ofindex of large and medium-sized enterprises，small micro enterprises and state-ownedenterprises， private enterprises and foreign enterprises in accordance with theenterprise scale and type for12years. Then we summarize the six indexes and got thejudgment of different export-oriented regional export-oriented industry and differentsize，different types of enterprise hollowing out degree and the trendSecondly，combined with the definition of export-oriented industry，this paperputs forward factors causing export-oriented industrial hollowing out that nevermentioned before，such as foreign trade growth，foreign direct investment growth， real estate prices，the stock index fluctuation，the increased cost of production. Aftertheoretically analysis，we draw the conclusion that when foreign-oriented exports andforeign direct investment rise slowly，real estate and other asset prices increases andcost of production increase，the export-oriented industry’s output，profit，investmentand employment growth will decrease，and strengthen the effect of hollowing out.Then we use the panel data model to study the factors in seven of nine export-orientedareas and export-oriented industry.the empirical results support previous theoreticalanalysis.Most factors that caused the export-oriented industrial hollowing out are affectedby the RMB rate changes，and China is under the expectation of the RMB exchangerate appreciation. Therefore this article in the exchange rate changes on trade exports，foreign direct investment，the real estate market prices and the stock market influencethe basic theory and related research results，from the perspective of theory and themathematical model with the appreciation of the RMB was discussed respectivelyexport-oriented foreign trade influence mechanism of regional and industry hollowingout，foreign direct investment effect mechanism，and the effects of asset pricemechanism. Finally，we use the economic data and the panel data model to prove theabove-mentioned three mechanisms respectively through empirical study. It turns outthat empirical results validate the rationality of the mechanism of these three effects.In this paper，the results show that RMB appreciation will affect industrialhollowing out by trade exports，foreign direct investment and asset prices. However，it must be noted that the real cause of industrial hollowing out is the mode ofexport-oriented economy. Because the RMB exchange rate continued to rise and theemergence of the phenomenon of export-oriented industrial hollowing out is theinevitable outcome of the economic growth mode for a long time in China. Under thesituation of insufficient domestic demand，in order to increase exports to boost GDPgrowth model has lasted for nearly a decade of rapid growth of our country economy，but also cultivate a large number of export-oriented enterprises. But，with thecontinuous expansion of international payments surplus，has long been undervaluedRMB accumulated huge upward pressure，and once the appreciation of RMBexchange rate，which in turn will through exports，foreign direct investment，assetprices and other factors affecting China’s export-oriented economy，restrict thesustained and rapid development of export-oriented industries， leading to theinevitable phenomenon of hollowing out gradually.We cannot prevent the RMB exchange rate appreciation and hope to realize therapid growth of economy by restoring export. It is necessary for us to finish industrytransition gradually，and guide the unsustainable export-oriented enterprises. We needto realize the conversion of fundamentally change the economic growth mode from anexport-led economy to a domestic demand-led economy and adjust the industrialstructure and product structure to make China powerful in world economy.