| The problem of RMB has become a focus since China entered WTO, and the most important aspcect of this problem is how much the exchange rate will affect forceign trade. Based on a monthly sample between Jan 1994 and Dec 2009, this thesis analyses empirically the long term cointegration relationship between RMB exchange rate and export (or import) in three aspects: whole quantity, different custom regimes and bilateral panel data. The results show export and import would both decrease when RMB exchange rate appreciates. Given one percent appreciation of real effective RMB exchange rate, the general export and import will decrease by 1.823 percent and 1.583 percent respectively. In another aspect, as the empirical result shows, the influence of RMB rate on processing trade is smaller than that on ordinary trade. The exchange rate elasticity of processing export is -0.325, smaller (in absolute value) than that of ordinary export, which is -1.943, while the exchange rate elasticity of processing import, -1.508, is also smaller than that of ordinary import, which is -2.205. Stability tests and recursive regression are carried on the general export and import models, which shows the exchange rate elasticity of export has a trend of ascent after 2002 and has maintained a level of about -1.8 since 2005; meanwhile, there are two significant patterns of the exchange rate of import, which is very small before 1997 and increases a lot to about -1.6 since 2000.Besides exchange rate, some other factors also have significant influences on trade, as this thesis finds out empirically. Foreigh income has much more influences on export than that of exchange rate, the former being the most important factor affecting foreith trade, while the impacts of domestic income on income is smaller than that of exchange rate, and the latter is the most important factor. FDI has a positive but only limited influence on trade. The volatility of exchange rate affects export feebly, but affects import negative significantly, and the impacts on processing import larger than on ordinary import. As to WTO, it has a signicant function both on export and import, while the former larger that the latter. The results also show the active fiscal and loose monetary policies implemented by the government to counterbalance the impact of the global financial crisis founction very well.The panel data models, based on the bilateral economic variables, also give some meaningful results. The general export panel data model shows that the appreciation of the bilateral exchange rate will decrease the export of China to European Union, Japan, Korea, Chinese Taibei and Sigapore. Among the exchange rate elasiticities, the largest is EU's, -2.040, and then Singapore's, -1.174, while the elasiticities of Japan, Korea and Chinese Taibei are smaller, which are -0.606, -0.692, and -0.449 respectively. But the bilateral exchange rates of China to US and Malaysia affect the bilateral export insignicantly. Meanwhile, the general import panel data model presents that while the influence of the bilateral exchange rate between China and Malaysia on import is insignicant, other countries (districts) display a strong significant exchang rate effect on import. Among these exchange rate elasiticities, the largest is Singapore's, -1.528, and then Chinese Taibei, -1.434, and US, -1.070. Others are smaller, the Japan's is -0.817, EU's -0.572, and Korea's -0.548.Considering all of above, this thesis concludes that RMB appreciation will generate adversary impacts on Chinese economy, and will not change effectively the imbalance of China's foreign trade. Under the pressure of RMB appreciation, adjusting economic structure voluntarily, meanwhile, accompanied by a slow appreciation of RMB, may be the most optimum method.There are three main differences between this thesis and other papers in this field. The first is that foreigh trade is studied from three aspects (the general quantity, customs regime and bilateral condition) and four other factors besides exchange rate and income (FDI, the volatility of exchange rate, China's accession to the WTO and world financial crisis) are considered. The second is that the stability of main estimated coefficients, got from general quantity models, is analyzed and accounts partly for the variety of exchange rate elasticities of export and import got by many literatures. The third is two estimation methods, classical OLS and FM-OLS, which is provided to solve the inconsistency of cointegration relationship, are used to estimate the panel data model. |
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