The Impact Of Rmb’s Real Exchange Rate On Sion-us Trade Balance

Since2003, the appreciation of RMB has become an important topic in Sino-US, due to the growing trade deficit. The United States thinks that China’s exchange rate policy is the main reason of its trade imbalances, and the US gives many criticisms about Chinese exchange rate policy on many public occasions, urge China’s government to significantly revalue the RMB. On July21,2005, People’s Bank of China announces a2.1%appreciation of the RMB, adopting the managed floating exchange rate system on the basis of market supply and demand. Since the exchange rate reform so far, Though the RMB in the state of appreciation, the adverse balance of Sino-US trade is also existing, whether RMB exchange rate is the root of the U.S. trade deficit, which causing a lot of the attention of scholars. Firstly, the paper summarizes the classical theory of exchange rate and trade and the effect of exchange rate change on a country’s trade balance, setting a theoretical foundation for the next research. Next, using the official statistical data analyzes of the characteristics of Sino-US total trade balance and structural characteristics of the two countries trade. Sino-US trade surplus mainly in SITC6(manufactured goods), SITC8(miscellaneous manufactured articles), SITC7(machinery and transport equipment), considering the effect of processing trade on China’s import and export, ad-ding foreign direct investment into actual this variable. In view of the impact of exchange rate fluctuations on the trade balance of the possible existence of J curve effect, the real exchange rate into the model to investigate the lag phase, to investigate the J curve of the fluctuation of RMB exchange rate on trade balance.The results show that:the real exchange rate of RMB trade between China and the US in terms of trade or the product structure have a certain impact, but due to the actual foreign direct investment, the United States and China economic interaction, Sino US trade is still a larger surplus;there are "J" curve effect to Different types of products (except SITCO, SITC3) in the background of RMB appreciation, and the "J" curve effect lag period is not consistent. The product categories, the "J" curve effect significantly different degree,SITC2(non-edible raw materials (excluding fuel)), SITC5(chemical products and related products), SITC6(according to the raw material of manufactured goods) and SITC7(machinery and transport equipment)"J" curve effect, RMB appreciation can reduce these kinds of products in the trade balance, and the SITC4(animal and vegetable fats and oils and waxes) and SITC8(miscellaneous Products)"J" curve effect weak, RMB appreciation on the trade balance has little effect on reducing.