Competitive Effect And Exchange Rate Pass-through Of China's Export Commodity

After the exchange rate reform in 2005,the RMB exchange rate kept appreciating for many years.However,the rapid growth of China's trade surplus momentum did not ease,the price index also showed changes in the same direction with the exchange rate.After two years' depreciation during the 2014 and 2015,the RMB exchange rate against the US dollar depreciated to 6.83%in 2016.At the last trading day of 2016,the RMB exchange rate against the US dollar was 6.9370.Exchange rate movements and the impact of exchange rate fluctuations has become the focus of attention.The current domestic research mainly focuses on the exchange rate changes on the overall import price transfer,the lack of product level data research and export price transfer inspection.On the basis of the literature on exchange rate transfer,this paper makes an empirical study on the effect of product level data on exchange rate fluctuation from the perspective of export price.On the other hand,this paper makes an empirical analysis on the export data of export countries-products-industries in China from 2000 to 2014.For the overall sample,when the real exchange rate of the RMB rises(depreciation)10%,the price of China's export commodities(in RMB)will be reduced by about 9.85%,that is,the exchange rate pass through rate is about 90.85%.When the export competition effect of the product is introduced,the competition in the market where the export products are located is more intense,the greater the exchange rate elasticity of the export commodity price,the more incomplete the exchange rate effect.Chinese exporters did not transfer all the risks of exchange rate changes to importers,but absorbed the fluctuations of exchange rate by adjusting their own profit to stable export prices.To the conclusion,we should enhance the market competitiveness of our products,rather than using the devaluation of the currency to expand the market.What we should do is to improve the competitive advantage of the product,as to reduce the risk of exchange rate changes.