The Impact Of RMB Exchange Rate Fluctuations On Shandong's Import And Export Trade

In 1994, the RMB exchange rate came in to merger, China carried out market-based,managed and floating exchange rate.The effect of exchange rate on China’s import and export trade is bigger and bigger. Since the reform of exchange rate in 2005, the RMB hsa started to appreciate. The appreciation of the RMB has brought different influence to our country’s economy, and has brought great pressure on China’s import and export trade. Shandong Province has made great contributions to China’s foreign trade, and the RMB exchange rate fluctuations has made great influence on the import and export trade of Shandong Province.The paper has analysed the amount and structure of the import and export trade to study the impact of the RMB exchange rate fluctuations.This paper choosed the data of real effective exchange rate and Shandong Provincial Import and export trade in 1994-2014.Based on the analysis of evolution of RMB exchange rate and the import and export trade situation of Shandong Province, we use the method of quantitative vector auto regression;Cointegration test,Granger causality test and other econometric analysis method, to study the impact of exchange rate fluctuations to Shandong Province Import and export trade volume and trade structure.The trade volume is based on2010,and trade structure is measured with the proportion of industrial manufactured goods in total imports and exports and the proportion of capital intensive goods in total industrial manufactured goods. At the same time, intra industry trade index is used.The conclusions are as follows:(1), there is a cointegration relationship between the real effective exchange rate and import and export trade of Shandong Province, the absolute value of the elasticity of import demand and export demand elasticity is greater than 1, so the Marshall Lerner condition was established in Shandong Province, if the RMB exchange rate depreciation,the trade revenue and expenditure wil be optimized. At the same time, the Granger causality test shows that the real effective exchange rate is the reason for the import and export trade of Shandong province.There is a positive correlation between the structure of export trade of Manufactured goods and capital intensive products and the real effective exchange rate,and there is a negative correlation between the import trade structure and the real effective exchange rate.The appreciation of real effective exchange rate is conducive to optimizing the structure of export trade, but not conducive to optimizing the structure of import trade.The intra industry trade index of primary product is inversely proportional to the real effective exchange rate of RMB,while the manufactured goods is proportional to the real effective exchange rate of RMB.When the RMB appreciates, the intra industry trade index of industrial manufactured goods rose,while primary product fall,the trade structure can be optimized onthe whole.According to the conclusions of empirical analysis, under the background of the appreciation of the RMB exchange rate, Shandong Province should actively promote the process of the RMB exchange rate reform, promote the level of exchange market; increase the income of residents, so as to promote consumption and expand the domestic demand;at the sametime,we should actively introduce foreign direct investment, expand it’s scale and scope;then,when formulating the industrial policy, pay attention to the differences between different industries.