| The European Union (EU) is China’s largest trading partner for China’s exports. The outbreak of European sovereign debt crisis has an impact on the economic development and consumer confidences in Europe, which in furtherance challenges China’s exports to Europe. The study on the impact of European sovereign debt crisis on China’s exports is theoretically and practically significant.From the root causes of outbreak in terms of European sovereign debt, this article finds out the crisis reasons and transmission mechanism, analyzes the impact of the crisis on European economies and global economic recovery, and from perspective of overall demands, it analyzes in details the impact of the crisis on China’s exports to Europe. Then, through an empirical analysis on general model and the panel data models for different countries, it quantitatively concludes detailed impacts on China’s exports to Europe, including the impact on China’s exports to the entire EU regions and impacts respectively on countries influenced and not by the crisis.The study results show that the outbreak of European sovereign debt crisis has significantly declined China’s exports to Europe, particularly on products of big price elasticity and substitutability in industries such as mechanics, electricity and metal manufacturing. The empirical results show that the reduction of overall demand in Europe, resulting from the sovereign debt crisis, is the main reason for the decline of China’s exports to Europe. However, the empirical results on the variable of exchange rate are not stable, and as a result of the diversity of countries, the impact caused by this variable somewhat differs. But, as a whole, the devaluation of the euro against the RMB will also negatively impact China’s exports to Europe, and the control on government debts and unit labor costs will have some influence on China’s exports to Europe.Finally, this article suggests that China urgently change the economic growth pattern, expand domestic demands, and reduce the dependence of economic growth on exports, as well as take precaution for the European sovereign debt crisis and prevent from government debt crisis. Specifically:First, make adjustment on economic structure, accelerate the transformation of export-oriented economy to domestic demand-led economy, and lower the proportion of exports in China’s economy. Second, optimize the structure of export market, and actively explore the diversified overseas market. Third, pay attention to monetary settlement and the flexibility in using settlement methods, and prevent the losses caused by fluctuation of exchange rate. Fourth, strengthen the management on China’s fiscal revenues and expenditures, as well as the government debts at all levels, reasonably control the government debts, and prevent potential financial risks. Fifth, take effective measures to properly solve the problem of an aging population, develop a modest social welfare and maintain appropriate government agencies. |
