Study On Channel And Effect Of The Influence Of RMB Exchange Rate On Chinese Consumption Structure

Consumer demand as the main source of all economic activities is closelyconnected with the economic development of our country. Expanding domesticdemand has been considered one of the ten important task in the twelfth five-yearplan，it reflects that our government has paid more attention to the level of theresidents’ consumption. Compared with the residents’ consumption, the structure ofthe consumption can be more accurate to measure the development degree of asociety and the quality of the residents’ consumption. So the structure of consumptiongained wider attention. Along with the level of economic development increasing inour country day by day, the structure of the residents’ consumption has changedsignificantly. The main content of the consumption has gradually transferred fromfood, clothing and other life necessities to non-essential commodities such as housing,health care, education and entertainment. It shows that the consumption structure hasbeen better. By compared the growth rate of per capita disposable income and thegrowth rate of per consumption expenditure indicate that the level of the consumptionis still not in conformity with current level of economic development, theconsumption structure should be further improved. Thus, continuing in-depth study onthe influence factors and the effect of residents’ consumption structure has greattheory and practice significance for expanding consumption level and improving theconsumption structure.Consumption structure will be affected by many factors, the conventional viewmainly focus on the entity factors such as productivity level, industrial structure andincome, but as the influence of the financial factors on social economy in our countryis stronger recent years, the factors such as interest rates, exchange rates, credit get scholars’ attention. Especially after the formation mechanism of the exchange rate ofRMB has been reformed in2005, import and export commodities prices, Corporateprofits, and residential investment changes by the increasing of RMB indirect,and itindirect relation to the residents’ consumption level and consumption content. So theinfluence of exchange rate on consumption structure obtained the widespreadattention of Chinese scholars. After all, the time of our country study on the questionof exchange rate-consumption structure is shorter, although they have someachievements in theoretical and empirical aspects, but they haven’t formed a completeand unified conclusion.This paper is using macro economic data from1994to2013to study on thechannel and the effect of the influence of RMB exchange rate on Chineseconsumption structure on the basis of the relevant achievements of Chinese scholars.It’s using Macroeconomic model to establish a theoretical analysis framework.Combining with the existing theory of economy, these are three paths for RMBexchange rate to affect residents’ consumption structure, respectively, the path of thewealth effect, the path of the income effect and the path of price effect. Themechanisms of three paths are analyzed in detail. On the basis of theoretical analysis,this paper is using the information entropy algorithm to comprehensively evaluate theresidents’ consumption structure. By comparing the growth of the per capitadisposable income and per capita consumption expenditure with the informationentropy algorithm of consumption structure in recent years, it finds that consumerquality gradually but remains to be improved in nearly20years.In order to further determine the influence of RMB exchange rate on theconsumption structure, this paper use Vector Autoregression Model from theperspectives of long-term and short-term to empirical test. The results show that in thelong term, the appreciation of RMB improves residents’ consumption structure mainlyon the route of wealth effect. The price effect and the income effect are bad for theoptimization of residents’ consumption structure in China. In the short term, becauseof macro economic turmoil caused by the rising of RMB exchange rate and people’sexpectations of future depreciation, the path of wealth effect can only to improve residents’ consumption structure temporarily. The path of the price effect and the pathof income effect subject to the conditions of our country economy openness onlyproduce weak effect. This paper provides new design ideas to seek for ways toeffectively improve residents’ consumption structure, improve the quality of residents’consumption and improve residents’ living standard.