An Empirical Study On The Impact Of RMB Exchange Rate Fluctuation On Processing Trade

On the background of the economic globalization, and the international division of labor have deepened further. China has been the primary base of processing for the western country, in this way, processing trade take a place in the international trade. Participating in the WTO, china’s exchange rate reform is on the way, it caused the appreciation of RMB. At the same time, exchange rate is the key tool of regulating and controlling the international trade for the country, it is obviously that the appreciation of RMB restrained the processing trade. On the base of this fact, it this paper we do some research to analysis the connection of the appreciation of RMB, the volatility of RMB and processing trade.In this way we hope to explain the current situation and problem of the processing trade, then we can put forward some suggestion for the promoting of the processing trade.With the data of the Chinese economic data(2001-2013), we do the qualitative analysis to researc the relation between the number of processing trade, the percentage of the processing trade in the international trade, GDP, the real effective exchange rate and rate volatility. In this paper, firstly unit roots test is applied to all the dates, which shows that they are all first order stationary series. Then co-integration tests are used to test the long-term equilibrium relationships among the all dates.In the result, we found that the percentage of the processing trade in international trade has long-term equilibrium relationship with the real effective exchange rate, rate volatility and GDP. At last, conclusions are achieved, and relative advice and suggestion are given for the promotion of processing trade.