An Empirical Analysis On The Influence Of The Exchange Rate To The Terms Of Trade Of Zhejiang

With the development of the economic globalization, the relations among countries are close increasingly. The countries participated in the international trade merge and penetrate into each other in economics and trade. All countries concern the interests of trade as the principle issue. Generally speaking, the countries participate in the international trade in order to obtain the interests as many as possible. The terms of trade is an important indicator which is used to measure the interests obtained through the international trade. It measures the position and reflects the distribution of a country in the international trade well. And it also reflects the influence that the country has to the international trade.The exchange rate is the ratio of one country's currency to the other country's currency. While the country participated in the international economic activities, the exchange rate is the most important and comprehensive price index. In the activities of international financial and trade, it plays the function of price exchanging. It determines the relative price of goods and services in the international trade. Given that, it must have some influence on the terms of trade of our country.Since the reform and opening up, as a big developing country, our country's position in the international market enhance increasingly. And the international trade becomes one of the important factors which influence our national economy. Zhejiang Province is the more developed province which lies in the east of China. It has the advantage of low factor costs and the better industrial base. "Made in Zhejiang" also has some international competitiveness. Zhejiang became one of the hot areas for diverting the labor-intensive industries and the links of processing and assembling of high-tech industries. Zhejiang has close relation to the world market. So this thesis mainly analyzes the influence of the real exchange rate to the terms of trade of Zhejiang Province.At first, it is the theoretical analysis. Firstly, define the concepts related to the terms of trade. Secondly, analyze the relations between the terms of trade of all kinds and the interests of trade. At last I analyze the mechanism of the influence of the exchange rate to the terms of trade. Then it is the empirical analysis. Firstly, analyze the status of both kinds of the terms of trade of Zhejiang Province. Secondly, analyze the status of the real exchange rate. At last, I made the empirical analysis of the influence of the exchange rate to the terms of trade of Zhejiang Province. Finally, according to all the analyses, I made some suggests for against the adverse effect of the exchange rate to the terms of trade.I find that the influences of the real exchange rate to the terms of trade of all kinds are all negative. That is to say, when RMB appreciate, all kinds of the terms of trade improve, when RMB depreciate then all kinds of the terms of trade deteriorate. Compare the income terms of trade and the net terms of trade, the exchange rate has a bigger impact on the income terms of trade. Compare the terms of trade and the terms of trade of industrial manufactures, the exchange rate has a bigger impact on the latter.