Empirical Study On RMB Exchange Rate Impact On The Balance Of Payments

Since China’s reform and opening up, the economy grew at an alarming rate, economic communication between China and other countries are also more closely. According to Ministry of Commerce statistics, China’s total import and export increased from $ 48 billion in 1982 to $4.16 trillion in 2013, ranking the world’s first.The situation can be described as rapid growth and the general trend continues. By the end of 2013, international reserves of China sit tight in the world, up to $3.82 trillion. Capital and financial account of China in 2013 surplus $326.2 billion, making rapid progress in relative to the deficit situation before the reform and opening up. But with the long-term accumulation of huge twin surpluses, China’s problems are gradually emerging and long-term imbalance of international payments bring up corresponding problem s.Firstly, a brief description of factors that affect the RMB exchange rate, mainly lists the main factors driving the continued appreciation of the RMB and conduction mechanism; Then, based on China’s international balance of payments from 1997 to 2013, the article make feature analysis for each account and do a deep bedding for data selecting of the model; After then the article make an combination of theoretical and empirical analysis, based on the modified Mundell-Fleming Model, using the quarterly data from the first quarter of 1999 to the fourth quarter of 2013,it make the use of the economic measurement method to do unit root test and cointegration test, and make analysis and forecast VEC models for the data.In the end according to empirical results obtained by the model,it makes analysis; Finally, it come up with a comprehensive summary of the full text article and propose appropriate policy recommendations for empirical conclusions.