A Study On The Dynamic Effects Among The Main Factors Of Chinese Foreign Trade

Since China entered the WTO, China’s foreign trade has expanded rapidly and the relationships between China’s economy and others’is becoming close gradually, which makes China economy one important factor of world economy. Which, on the one hand, contributes to the development of foreign trade. On the other hand, China’s economy is more vulnerable to the impact of the international economic fluctuations, which exacerbates the uncertainty of China’s economy, and the international financial crisis in2008is the evidence, with the large scale and high growth, foreign exchange reserves, foreign direct investment and exports is becoming more and more important to China’s social and economic development and becoming an important part of China’s international trade administration. Research on the relationship among foreign exchange reserves, exchange rate, foreign direct investment and exports, especially the dynamic effects of the interaction among them is conducive to building an effective mechanism for the harmonious development of domestic and international macroeconomic policy and provide theoretical basis for country’s macro-economic management.However, a comprehensive study of the dynamic impact and its degree can help China select sound macroeconomic policies. In view of these shortcomings, a SVAR model and a VEC model are used in this thesis to analyze the impulse response and variance decomposition among these variables and reveal the intrinsic essential relationship among them.Based on the relevant monthly data of foreign exchange reserves, exchange rate, foreign direct investment and exports from January1997to December2013in China, this thesis uses a SVAR model and a VEC model to analyze dynamic effects among these variables. The research findings show that there exist long-term stable relationships among foreign exchange reserves, exchange rate, foreign direct investment and exports in the long term. In the short term, when exports and exchange rate deviate from their long-term equilibrium, the error correction terms cannot be restored to the long-term equilibrium immediately, while when foreign exchange reserves and foreign direct investment deviate from their long-term equilibrium, the error correction terms can be restored to the long-term equilibrium instantly, and the error correction term of foreign exchange reserves is in accordance with the positive adjustment mechanism, but that of FDI is in accordance with the negative adjustment mechanism. The effects of exchange rate and foreign direct investment on foreign exchange reserves are significant in the short time, in which the effect of foreign direct investment is stronger and the effect of exchange rate is weaker, and the effect of exports on foreign exchange reserves is the weakest in the short time, however, in the long time the effect of exchange rate is significant,at the same time the effect of foreign direct investment becomes weaker and the effect of exports is the weakest. The effects of exchange rate and foreign direct investment on foreign exchange reserves are great, in which the effect of foreign direct investment is stronger and the effect of exchange rate is weaker. The effects of foreign exchange reserves and foreign direct investment on exchange rate are negative. The effect of exchange rate on foreign direct investment is negative and is significant in the short time.