Research On The Impact Of Changes In RMB Real Effective Exchange Rate On International Trade Balance In Shandong Province

With the development of global economic integration, the exehange rate is playing an important role in the internal and external equilibrium and the fast growth of national economy. Since 2005, the adverse influences of RMB exchange rate fluctuation on Shandong's trade balance gradually emerged. In view of this, research on the influences of RMB exchange rate fluctuation on Shandong's trade balance is undoubtedly of great theoretical and practical significance. This research provides the scientific basis for government and business responsing to appreciation of RMB.Based on commenting on the development trend of the RMB exchange rate regime and trade balance situation in Shandong Province, along with the integrated use of finance, econometrics, statistics, international trade, industrial economics theory, this paper use cointegration test, ARDL model, Chow test, impulse response, error correction model to search for the static and dynamic influence on international trade by real effective exchange rate in short and long term.The results of the analysis reveal that:(1) In the long run, the exchange rate elasticity of exports is 2.5077. The exchange rate elasticity of imports is 7.2597. The Marshall - Lerner condition was established in Shandong province.(2) Imports exists "J" curve effect. In the short term, respondence to the depreciation of real effective exchange rate of exports is very sensitive, reacting quickly and showing an increasing trend. In the long run, exports exist meet the "S" curve.(3) In three cases International trade balance of exchange rate flexibility coefficients are -0.4650, -0.4911 and - 0.1624. So exchange rate changes have a little effect. (4) Major trading countries income elasticity of exports is 1.7350. Real income elasticity of imports is 0.9180. Shandong and the major trading countries real income elasticities of the overall trade balance are -0.1910 and -0.3366.(5) Shandong's trade balance is obviously impacted by trade policy. And exports are affected significantly than imports. Trade balance elasticity of the overall international trade policy is 1.0939.(6) During the first few years of RMB real effective exchange rate appreciation Shandong international trade balance shows signs of deterioration. Then it will adjust at the rate of (-0.1641) from the non-equilibrium state back to equilibrium.Finally, the paper discusss five reasons based on the empirical results and proposed some suggestions. The world economic recession, strategic adjustment of foreign-funded enterprises, unreasonable import and export commodity structure cause that Shandong's trade balance is not sensitive to exchange rate changes. The thesis proposes to speed up upgrading of trade transformation and develop enterprises, improve the foreign investment structure , and so on.