| On January1,1994, the first reform of the RMB exchange rate system was directed. The purpose of the reform was to make RMB exchange rate based on the supply and demand of the market. We can say that RMB was pegged to U.S. dollar informally, and the change range of RMB exchange rate was under control. Then after the reform, RMB began to appreciate. But after the Southeast Asian financial crisis, the range was significantly narrower. In fact, that was already a single fixed exchange rate regime. Due to the devaluation of the dollar, RMB began to depreciate. In the end, there was a serious imbalance in China’s international balance of payments, and China’s inflationary pressure appeared.Under such circumstances, People’s Bank of our country decided to restart the reform of exchange rate regime. And RMB was no longer only pegged to the changes of the dollar. On the basis of supply and demand of the exchange rate market, RMB referred to a basket of currencies in a managed floating system. A basket of currencies included dollar yen、won and so on. From that moment, Yuan appreciated by nearly2%.RMB began its appreciation journey. Since the second exchange rate reform, the RMB had appreciated by19%. After the financial crisis of2008, in order to further increase the flexibility of RMB exchange rate fluctuations, China’s central bank decided to restart the reform of the RMB exchange rate regime on June19,2010.RMB still insisted on the basis of market supply and demand with reference to a basket of currencies. Since then, the Yuan began increasing appreciation. Especially after the U.S. debt crisis and debt crisis in Greece, the fluctuation of RMB exchange rate was quite frequent.At the same time, along with development of economy, export has become the main driving force of Sichuan’s economy. Only in2011Sichuan exported$29billion in trade. Most export commodities were labor-intensive products. The production process of these products required a lot of labor input and absorbed large amounts of labor which could not only solve the problem of employment of laid-off workers, but also could absorb the rural a lot of surplus labor. The export of labor-intensive products accounted for nearly60%-70%in total exports of Sichuan. Exports of textiles, fabrics and textile yarn class of Sichuan increased by4.3%, the number of exports was$11.5billion. The luggage and travel goods in2011doubled, reaching$1.77billion.Most domestic and foreign theoretical researches focused on the relationship between exchange rates and trade. From early price-Mint mechanism to exchange rate flexibility, then later the J-curve effect. We can see the impact of exchange rate on foreign trade varies in many ways.Early price-Mint mechanism indicates that economic activity does not require direct government intervention in the gold standard system. The economy has automatic adjustment function. This feature allows the economic imbalances tend to the equilibrium state at home and abroad.Theory of exchange rate flexibility shows that the relative prices of movements in exchange rates affect a country’s import and export of goods, thus a country’s international balance of payments will be changed. Whether the depreciation of a country’s currency can change a country’s trade balance or not depends on the country’s supply and demand elasticity. When the elasticity of demand for exports and demand of imports is greater than1, the devaluation of a country’s currency can improve the country’s trade balance, and vice versa.J-curve theory points that because of the time lag effect, the import and export of a country will not change immediately after appreciation or depreciation of the exchange rate. The volume of import and export will make a corresponding change in a certain time period. The length of adjustment time which depends on national circumstances, may be one year or may be five or six years.On the basis of theoretical studies, we need to analyze the impact of exchange rate on the export of Sichuan Province in empirical way. The exports of labor-intensive products are the bulk of the Sichuan province exports.Therefore, there is a need to focus on the impact of exchange rate changes on the particular labor-intensive industries.On the basis of theoretical analysis, we will use monthly data from2007to2011to study the impact of exchange rates on labor-intensive exports in Sichuan Province. The traditional labor-intensive products-textile exports will be used to analyze impact of exchange rate changes on the labor-intensive products of Sichuan Province.The innovation of this paper is to integrate theory analysis with practical analysis. We select the five years before and after the financial crisis with60sample data, to fully analyze the impact of the RMB frequent fluctuations on exports. At the same time, to better reflect the fluctuations of the RMB exchange rate, this article will use the monthly data. However, due to limited time and energy, the empirical part of this article can not completely fully, systematic explain the affect of exchange rate fluctuations on the labor-intensive products in Sichuan Province. This paper will be divided into five parts:The first chapter will introduce the background and significance of this study, review literatures. The contents and methods of this research, innovative and inadequate places also will be introduced. The second part will describe related theories. Chapter Ⅲ will analyze several exchange rate reforms we have experienced. Exports of labor-intensive products in Sichuan Province will be analyzed in Chapter IV.Based on the analysis of the third chapter, we will select the relevant model to empirically analyze the impact of RMB exchange rate changes on labor-intensive exports in Sichuan Province.The sixth chapter is the conclusion. After qualitative and quantitative analysis, we will rationally assess the impact of the RMB exchange rate changes on the labor-intensive exports of Sichuan Province. |
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