RMB Appreciation Influence On Export Trade Of Jiangsu Mechanic And Electron Products

Starting from July 21st,2005, China reformed the exchange rate regime by moving into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. RMB will no longer be pegged to the US dollar and the RMB exchange rate regime will be improved with greater flexibility. From then on, RMB is entered the period of continued rising. RMB appreciation is a hot topic which was paid much attention by international community and academic circles. The discussion is focus on the negative impact on the Chinese economy since RMB appreciationJiangsu has led the country as its mechanical and electrical products export takes the second place in China in terms of total value. Meanwhile the mechanical and electrical industry is the key industry for export in Jiangsu as its export accounts to more than 50% of total export value, which should not only be helpful to improve the growth of regional economy but also conductive to reassure residents' income growth speed. RMB exchange rate is one of the important reasons that will impact the mechanical and electrical products export. Fluctuations in RMB exchange rate will affect the exports of mechanical and electrical products by changing the price of mechanical and electrical products, increasing the speed of exporting and so on. Since the reform of the exchange rate, the value of RMB is continually appreciating. This may have bad effects on the export volume, prices, and increment speed of the mechanical and electrical products in Jiangsu province, and then will have a negative impact on the economy of Jiangsu province. So, currently, it's a very important problem to be researched and solved.This paper focuses on the theme of RMB appreciation on export trade of Jiangsu mechanical and electrical industry, select the data from quarter 3 2005 to quarter 4 2010 Jiangsu Province to study samples. First of all, reflects the fact that RMB appreciation affects the feature of mechanical and electronic export since exchange rate reform from the influence of RMB appreciation on the export price & export increase speed of mechanical and electronic enterprise of Jiangsu. The result shows that, the RMB appreciation has bad effect on mechanical and electrical product export of Jiangsu. What's more, select the mechanical and electrical products exports as the core variable to empirically analyzes the impact of the RMB appreciation on mechanical and electrical products export of Jiangsu Province. Co integration Test and Granger Test are used to test the relationship between RMB appreciation and mechanical and electrical products export of Jiangsu Province. The result shows that, RMB appreciation is the reason why mechanical and electrical products export of Jiangsu Province increasing speed descends. Finally, in consideration of the impaction of the RMB appreciation on mechanical and electrical products exports of Jiangsu Province, this thesis provides some suggestions, wishing to avoid the adverse impact of the RMB appreciation to mechanical and electrical products exports of Jiangsu Province. We should adopt positive attitude on RMB appreciation and enhance mechanical and electrical products' competitive ability to minimize the negative impact on trade of mechanical and electrical product and mechanical and electrical industry.