Rmb Exchange Rate Changes On China's Import And Export Trade

After the reform of exchange rate in 2005 July, The people's bank of China declared to promote the RMB exchange rate formation reform and increase the RMB exchange rate elasticity on June 19, 2010. The appreciation of RMB presented persistent and in low level during the period, however, Chinese import and export increased year after year, and just the increasing speed of export slowed down.Now the Chinese trade policies and structure have changed substantially. How about the macro institution for Chinese trade, what empirical affectation can the RMB exchange rate fluctuation bring to trade, and how the most industries focusing on labor-intensive to adjust develop way are the problems I want to resolve in this paper.The analysis integrates the theories and empirical research. On the one hand, the paper clearly described the Elasticity Theory, IS-LM-BP model (introducing Chinese factors), and so on. On the other hand, the empirical analysis utilizes lots economic variables such as RMB effective exchange rate, M2, actual foreign investment amount, export amount and import amount. The qualitative analysis shows the trade institution between China and America, Germany, Japan under the bilateral exchange rate fluctuation, based on data and graph. In the end, recommendations based on conclusions answer the question in qualitative and empirical analysis.The co-integration model indicates that both RMB effective exchange rate with export index and RMB effective exchange rate with import index have equilibrium relationship in long term. The error correction model points that the devaluation of RMB will expand export and import, while the appreciation of RMB will decline the export and import.The two-step regression of RMB pass-through indicates RMB effective exchange rate, actual foreign investment amount and M2 have a positive effect on corporate goods price index. That means domestic general price will be higher caused by the appreciation of RMB and also the more and more actual foreign investment amount and M2. Besides, when we use the lag-one RMB effective exchange rate, the estimated parameter is negative, which says the appreciation of RMB will first higher domestic general price and then lower it. The corporate goods price index has significant positive effect on import amount, in other words, the demand for import substitution will be more if the domestic general price be higher, so there will be more import amount.All in all, the appreciation of RMB will add relative cost in short term, but be good for the improvement of macroeconomic development quality in long term. At the present stage, we can implement strategies such as utilizing a variety of settlement currency and strengthening the management and supervision of risks to less the adverse influence.