The Effects Of RMB Exchange Rate Changes On China's Economic Growth

In case of opening economic system, economic growth cannot be studied Well without the consideration of exchange rate. In modern economic system exchange rate serves as the key element in financial development as well as the coalition of domestic economy and international economy and the tie between domestic market and international market. The arrangement and development of the exchange rate regime in a country can manifest its economic development level in addition to the evolvement of the economic development degree. Economists always put emphasis on the arrangement of exchange rate regime in developing countries. Generally speaking, no standard mode of rate regime adapts well to all developing countries. Developing countries usually choose the exchange rate regime with the most reasonable expect according to the economic development level, history evolution, consuming habits of residents and etc.Recently, RMB rate has been key issue in international politics and economy. Politicians from various countries discuss whether RMB is undervalued but do not get any clear result. China's present exchange rate regime, so-called "manage floating regime" is actually a fixed rate regime pegged to US dollar which will expose more and more defects and become unsustainable during the process of China's further opening-up. Therefore, RMB exchange rate regime needs to be reselected.In this passage, firstly, some researching fruits ago have been reviewed from view of development economic research. It aims at explaining the relationship between rates and output so as to solve the biggest puzzle in this passage: rate switch is short term and micro while economic growth is long term and macro. How to establish a persuasive relationship between different independent variables and dependent variables is the base and precondition in this passage. this writer tries to connect exchange rate theory with economic growth theory and make study on the relationship between RMB rate regime and economic growth through financial development theory. Secondly, analyze mechanism of transmitting between exchange rate regime and economic growth, with the theory above we can analyze comprehensive relationship between exchange rate regime and economic growth through factor of economic growth, such as foreign trade, capital flowing, price level etc. At last, give my suggestion about how to face appreciation of RMB and how to choose exchange rate regime of RMB,Our work's emphases is how to establish mechanism of forming RMB exchange rate and insist on mechanism of RMB exchange rate is good for China's economic growth . The writer'purpose is that research rate issues, analyze financial development issues in developing countries through rate issues, try to manifest relationship between economic growth and exchange rate regime in micro method.