Rmb Appreciation Impact Analysis, Import And Export Of Shanghai Waigaoqiao Free Trade Zone

Exchange rate, an important economic variable, performs the function of transforming price in international finance and trades. The fluctuation of exchange rate has great impact on economy through affecting import and export and foreign direct investment. Since the Central Bank declared to increase RMB value by 2% in July 21^st, 2005, the total appreciation of RMB has surpassed 3%. Moreover, RMB still has the trend of further appreciation in the historic view of economic development of the world. Therefore, more and more people pay attention to the impact of RMB exchange rate on the economy of a certain area.As an important area in Shanghai, Wai Gaoqiao Free Trade Zone holds a degree of trade dependence of exceeding 80% and foreign investment dependence of over 70%. So it is necessary to study the influence brought by the variation of exchange rate and to make scientific prediction. It will be propitious to both macroeconomic policy-making and microeconomic enterprises' decision-making.This paper briefly reviews some related theories and documents, and introduce the background and history of Wai Gaoqiao Free Trade Zone. On the basis of this, the paper studies the impact of RMB exchange rate on three main industry of Wai Gaoqiao Free Trade Zone, i.e., international trade, modern logistics and processing manufacturing. Using statistical model, the paper analyzes the general impact of RMB appreciation on import and export of Wai Gaoqiao Free Trade Zone and give relevant suggestion on future development.RMB appreciation has different influence on international trade, modern logistics and processing manufacturing in Wai Gaoqiao Free Trade Zone. Since import plays main role in international trade and modern logistic, these two industry gains during the appreciation of RMB. However, for processing manufacturing, export business brings them loss. With quantified analysis on import and export of Wai Gaoqiao Free Trade Zone against different trading partners, the paper concludes that the appreciation of RMB exchange rate has positive impact on import but has nearly has no impact on export. After taking import and export with U.S.A as an example, the paper calculates the exchange rate elasticity and proves that Wai Gaoqiao Free Tade Zone gains during the appreciation of RMB since the exchange rate elasticity on import is higher than export.As a conclusion, the paper suggests that Wai Gaoqiao Free Trade Zone should take self-advantage, adjust industry structure and expand import scale to contribute to the future economic development of Shanghai.