The Appreciation Of The Renminbi To The Influence Of Chinese Auto Industry Import And Export

The automotive industry is an important pillar industry of national economy,China has become one of the big car producing countries in the word. In2010, thetotal industrial output value of the automotive industry reached4.3049trillion yuan,with year-on-year growth of36.2%. During the National12th Five-Year Plan period,China’s auto output will reach25million, total industrial output value will reach4.5trillion yuan, automotive industry increasing value will account for3%of the grossdomestic product (GDP). In2010, China’s automobile import and export volumereached$108.531billion, accounting for3.65%of total imports and exports, so theautomotive industry is an important trade sector. Exchange rate movements will affectthe international trade of a country. This paper takes China’s auto industry import andexport trade for the study object, analyzing those factors that may affect the importand export of automotive industry, which include changes in real effective exchangerate of RMB, and further from appreciation of the RMB exchange rate risk point ofview, policies recommendations dealing with exchange rate risk are provided for theenterprises importing and exporting automotive products. The following research hasdone in this paper:1. Combing the existing relevant theories and research about exchange raterelating with a country’s overall import and export trade, as well as the relevantliteratures about how exchange rate movements affect the overall import and exporttrade of a country and how it impacts on the industry, while discussing the strengthsand weaknesses of existing research, those studies not only provide a theoretical tooland reference data, but also provide possibility for further research.2. Describing the status of import and export of automotive industry of China,and analyzing possible factors that impacts on China’s automobile import and export.3. Using the variables resulting from analysis and available data to build modelto finish quantitative analysis, constructing a model of factors affecting China’s autoimports and a model of factors affecting China’s auto exports respectively, whilebuilding their expansion equations. After the analysis of the empirical regression results, obtaining the conclusions that so far, the real effective exchange ratemovements do not affect the automotive industry imports and exports significantly.4. Drawing on existing research literature, the paper is trying to explain theresults above by discussing lack of demand elasticity, the distinction between the realeffective exchange rate and nominal exchange rate, income and other factors whichare more significant and so on.5. Based on China’s currency appreciation pressures currently, suggests areproposed including companies importing and exporting automotive products shouldtreat rationally exchange rate appreciation, at the same time, take reasonable measuresto avoid exchange rate risk, improve their competitiveness and so on.