The Influence Of US Dollar Depreciation On Chinese Export Structure:2002-2012

This paper focus on restructuring of Chinese export trade along with the weak dollar environment in the new century and I want to know how dollar depreciation impacts on the directions, the extent of Chinese export industry and provides a series of policy advice for the reform of Chinese foreign trade exports.The definition of the export structure in this paper is the share of labor or capital intensive industry’s export trade volume to trade volume of the Chinese total export manufactured goods and their corresponding competitiveness.The article uses the method of transverse and longitudinal comparative analysis to study different factors intensive industry on industry level data. Then this article selects 2002-2012 period during which dollar goes weak as a reference period to study China TC index of industrial products export and evolution of the process, and finally build gravity equation to value the weak dollar’s impact on the directions, the extent of China’s export industry based on the last SITC 2 digit data. Final conclusions have the following main points:First, by calculating the Index TC index of 38 exporting industries of industrial goods from China, we can get can find throughout the period of depreciation of the dollar, the transition to a gradual trend of capital-intensive products from labor-intensive products t due to dollar going weak. In addition, pegging to the whole currency basket is more efficient than pegging to the dollar, indicating that the exchange rate reform in China promotes the comparative advantage of the export manufactured goods.Second, by using the annual data from2002 to 2012 of China’s 50 largest export trading partner imports from China and building gravity equations, we can confirm that weaker U.S.dollar against the RMB will inhibit the United States imports capital and technology-intensive products from China and promote China’s capital-intensive products export to developed countries and regions in Asia and the BRIC countries and regions except the United States.Third, the dollar may have a great impact on China’s exports of labor-intensive products. Because the proportion of exports of these products has a greater flexibility of exchange rate.Finally, this paper summarizes the research findings and proposes appropriate policy recommendations. China should develop the emerging markets,stimulate domestic consumption and steadily integrate domestic production of labor-intensive industries. And China should actively engage in trade negotiations with the international community to resolve the exchange rate dispute. In the end, China should continue to steadily promote the reform of the RMB exchange rate formation mechanism so that it can play an active role on the domestic industrial upgrading.