The Analysis On The Effect Of Sino-US Exchange Rate On The Foreign Trades From China

In July2005, the China’s exchange rate system changed from the fixed exchange rate regime pegged to the dollar into a managed floating exchange rate system, marking the Chinese exchange rate system reform entered into a new stage. Then in2008, the international financial crisis hit the U.S economy heavily, and spread to China’s economic and foreign trade. As we all know, the United States is one of the main partner countries of China’s import and export trade, thus the changing economic situation in China and in the United States affected Sino-US exchange rate fluctuations, and then caused certain impact on Sino-US import and export trade.This article will make a systematical and deep analysis on the impact of Sino-US exchange rate volatility on the import and export trade between United States and China. Firstly, it will make use of the optimal model to measure volatility of Sino-US exchange rate by establishing a series of ARCH-M models or GARCH-M models, and then choosing the optimal one by the measurable indicators used in the econometrics. Then benefiting from the classification of products made in some article, this article will also classify the import and export products between United States and China into labor-intensive products, capital and technology intensive products, food and resources intensive products. Basing on the classification, it will make an empirical analysis with regard to the effect of the Sino-US exchange rate volatility on the above products in the import and export trade between United States and China. Specifically, this analysis consists of a long-term relationship with the method of Johansen equilibrium tests and a short-term dynamical relationship by error correction model. Finally some policy proposals will be provided at last, in the hope of stabilizing the volatility of Sino-US exchange rate and enhancing the ability of our import and export enterprises to avoid the related risks.Through the models established and the empirical analysis carried out in this article, conclusions are reached as follows:1. When RMB is appreciating relative to the dollar in the long run, the export and import of labor-intensive products, capital and technology intensive products, food and resource-intensive products from China to the United States is rising respectively. The net export both of labor-intensive products and food and resource intensive products is rising while the net export of capital and technology-intensive products is falling. This confirms the fact that the measure of repeatedly putting pressure on the appreciation of RMB to alleviate the Sino-US trade imbalance is not valid.2. When RMB is appreciating relative to the dollar in the shout run, capital and technology intensive products’import is rising and net export is falling while food and resource-intensive products’import is falling and net export is rising. However, the export of all these three types will not change as well as both export and net export of labor-intensive products. It will provide the basis for import-export enterprises and policy authorities to take measures timely.3.In the short term, with Sino-US exchange rate fluctuation, the export and net export of labor-intensive products, the import and net export of capital and technology-intensive products will be influenced.However, the import of labor-intensive products and the export of capital and technology-intensive products will not change as well as both the export and import and net export of food and resource-intensive products. This conclusion is helpful for Chinese import-export enterprises and policy authorities to response positively and take effective measures.