The Impact Of Appreciating RMB On China's Trade

After the adjustment of RMB exchange rate In July 2005, the range of RMB Appreciation and the effect on China'economy, on China's trade especially has been an important question. A Computable General Equilibrium (CGE) is constructed to evaluate quantitatively the impact of the revaluation of Chinese Renminbi on China's economy. The CGE model constructed in the study is estimated using calibration procedure coupled with econometric estimation for key parameters. In the article, we assumptions the RMB appreciation3%,5%,8%. A Computable General Equilibrium (CGE) is constructed to evaluate quantitatively the impact of the revaluation of Chinese Renmibi (RMB) on China's trade. The result indicated that the effect of appreciating RMB on the Chinese import and export is not linear form, and its impact on the import is good, but on the export is not good ;its effects on industrial sectors are quite different as well, especial on manufacturing and energy industry, its effects on industrial sectors are not quite different, especial on agriculture industry, coke making, coal gas petroleum manufacturing industry and machinery manufacturing . The general conclusion in this study is that appreciation of RMB is quite advantage on China's trade. However, it will be wise to widen the change interval of RMB exchange rate . At last, based on the CGE model and the experiment of other countries, this paper made some advises.