The Influence Of Rmb Real Exchange Rate On China's Economic Growth

The research on the impact factors on domestic economic growth has been animportant topic for a long time in the current China. China has been moved toward an openpath of economic development by the reform and opening up policy after the Third Sessionof the Eleventh Central Committee of the Party, and the world market has also become animportant driving force to promote China’s economic growth. As a key element to connectdomestic and international economic, the RMB exchange rate which has an impact onChina’s economic growth, should become the focus of our research. After the founding ofnew China, the RMB exchange rate regime has been changed gradually from a fixedexchange rate system into the managed floating exchange rate system. In the openeconomy environment, as the actual value of the RMB, the real exchange rate will have afar-reaching impact on China’s economic growth.The research method of the combination of the qualitative and quantitative analysiswill be taken in this paper. On the basis of the combination of Western economics,international economics and industrial economics theory of multi-disciplinary, thecomprehensive analysis of the impact of the RMB real exchange rate on China’s economicgrowth has been made. According to the definition of the real exchange rate, respectively,from two aspects of RMB external and internal real exchange rate, the qualitative analysisof the mechanism and the path of its influence to China’s economic growth have beenmade. And on this basis the empirical analysis and research have been made. Usually acountry will be linked with other external economy through international trade andinternational financial activities, and the mechanism of the influence of external realexchange rate of RMB to China’s economic growth is divided into the trade regime andinvestment mechanism. We will use the trade openness and foreign direct investment ascontrol variables to make the analysis of the long-term co-integration relationship betweenthe external real exchange rate and China’s economic growth in the empirical studies. Andthere is a close relationship between the fluctuation of internal real exchange rate andchanges in industrial structure. Therefore, the theory framework of the influence of internalthe real exchange rate into economic growth contains the changes of industrial structure,and the long-term co-integration relationship between internal real exchange rate andChina’s economic growth is also certificated in the empirical research. As a result, on theone hand, there is a long-term co-integration relationship, whether through trademechanism or mechanisms of investment, between the external real exchange rate andChina’s economic growth, and it presents for the positive correlation, indicating that in the long run, the appreciation trend of the external real exchange rate is more obvious to theexpansionary effect of China’s economic growth; on the other hand, the internal realexchange rate is also positively related to China’s economic growth, as a long-termco-integration relationship similar to the external real exchange rate. Finally, influencingfactors on the real exchange rate changes have been in research and analysis. Beingcombined with the influence of the real exchange rate to China’s economic growth, thedomestic macroeconomic policy recommendations have been given corresponding to theexchange rate regime, trade policy and industrial structure.