A Study On The Impact Of RMB Exchange Rate Changes On Regional Industrial Structure

As an important price signal,Exchange rate not only lies in the core of foreign trade and economic,but also plays a vital role in the domestic and foreign resources allocation.From the development of China's exchange rate system,the exchange rate changes will affect the cost of a country's participation in the international specialization,changing the relative price of a country's production factors to guide reconfiguration of domestic resources.The adjustment of industrial structure is essentially a kind of resources flows and reconfiguration between different departments,so exchange rate changes is closely linked with industrial restructuring.Since the implementation of the exchange rate reform in 2005,the RMB against the US dollar rate appreciated in a steady rate.By the end of 2013,the Yuan has appreciated against the dollar as high as 35.7%.However,affected by the weak demand of the global economy and downward pressure on China's macroeconomic,since 2014,the RMB against the US dollar exchange rate has broken the unilateral appreciation,showing a new trend of two-way volatility.Overall,the flexibility of the RMB against the US dollar exchange rate will be further enhanced,and fluctuation range may also be expanded.At present,China has entered a crucial period of reform,the domestic economy is in a critical period of restructuring.Accelerating the transformation of economic growth mode from extensive to intensive is a profound change in the economic field.Industrial restructuring is extremely urgent.Speeding up industrial restructuring and economic development transformation are an urgent demand to achieve sustainable development and social justice.Industrial structure is the result of domestic and foreign resources configuration,internal and external resources configuration achieves through price signal.As an important price signal in the adjustment of domestic and foreign resource flows,the impact of exchange rate on industrial restructuring is increasingly important.Exchange rate also is an important way to study industry structure adjustment.Therefore,in the background of deepening the reform of RMB exchange rate,linking the exchange rate with our real economy,discussing the impact of exchange rate changes on industrial adjustment and upgrade is significant.This paper consists of six chapters,the first part is the introduction,mainly introduces the background and significance of the exchange rate impact on industrial structure,then summary literature research and finally explain research ideas.The second part is the theory of industrial structure and exchange rate,mainly to provide relevant theoretical support for the ensuing discussion,including the theory of purchasing power parity,Balassa-Samuelson effect,Petty-Clark Law.The third part discusses mechanism pathways of the exchange rate affecting industrial structure,elaborated from three paths,the price level,FDI and foreign trade,and then we have a more clear understanding about the impact on the industrial structure.The fourth part is a brief review of the RMB exchange rate changes development and evolution of China's industrial structure.The fifth part is the core part of this paper,making empirical testing about the relationship between the exchange rate and industrial structure.This paper takes 29 provinces as sample to establish the panel VAR model to examine the dynamic interactions between the RMB exchange rate changes and China's industrial structure.Empirical part consists of two parts,from the view of the whole country and region.Through impulse response and variance decomposition,we find that from a national perspective,the RMB appreciation will reduce the proportion of secondary industry in GDP,increase the proportion of tertiary industry in GDP,which is conducive to promote industrial restructuring and upgrading.As can be seen from both FDI and foreign trade conduction mechanism,the RMB exchange rate appreciation is not conducive to FDI inflows in the short term,the reduction of FDI inflows cause the decline of industrial structure index and help promoting the adjustment of industrial structure to a more reasonable direction.In the case of the RMB exchange rate appreciation,net exports will also decline in the short term,manifested as exports fall and imports rise.Increasing Imports are in favor of the introduction of advanced technology and management,and promote the development of tertiary industry,thereby improving the proportion of tertiary industry,and ultimately promote industrial restructuring and upgrading.From a regional perspective,both eastern and western,the RMB exchange rate appreciation has a inhibition to the development of secondary industry,while developing tertiary industry,reducing the ratio of secondary industry output to tertiary industry output,optimizing the industrial structure.However,with the impact of the opening of the area,resource endowments,as well as the national industrial policy and other factors,the impact of exchange rate changes on regional industrial structure still exist obvious differences,for the secondary industry,the impact of RMB exchange rate appreciation on the eastern areas is greater than the Midwest areas.The tertiary industry face the same relationship,due to the openness of the eastern region is higher than the Midwest;the affection from exchange rate fluctuations is greater than the Midwest.Finally,Section VI presents three policy recommendations based on the results of Part V.Firstly,pay attention to the impact of RMB exchange rate on the industrial structure,improving the RMB exchange rate formation mechanism.Secondly,transform the way of economic development,coordinating regional industrial structural.Thirdly,optimize commodity trade structure,and actively guiding the FDI flows.