The Empirical Research On China-india Real Effective Exchange Rate And Imbalanced China-india Trade

China and India,as the two largest developing countries in the world today,have a high degree of similarity in their historical origins,natural resources,development and economic conditions.The good geographical advantages of neighboring countries have brought great opportunities for China-India bilateral trade,so China has become India's first largest trading partner,and India has also become China's largest business in South Asia.However,in recent years,as China's trade surplus with India continues to expand,trade friction between the two countries has intensified.Until the end of 2016,China has become India's first source of deficit,so India frequently launched trade remedy cases and anti-dumping investigations.As a result,China's exports of goods by India suffered a variety of sanctions.The exchange rate is an economic variable that is extremely important for any countries because economic variables such as trade,consumption and investment affect the overall economy.The exchange rate arrangement has become an important and sensitive issue in the environment of international economy.The trade between China and India is unbalanced,partly caused by the undervaluation of the RMB exchange rate,so the appreciation of the Chinese RMB is proposed.For the purpose of developing the normalization of economic and trade relationships between the two countries,and also for the healthy development of the global economy and trade,this thesis analyzes the trade situation between China and India,the relationship of the exchange rate and the trade between the two countries,and the impact of China-India GDP on trade balance.So as to find ways to solve the trade frictions between the two countries and to achieve mutual benefit and common development.The main contents of this thesis are as follows:based on the import and export data of China and India from 1995 to 2016 and the import and export data of HS classified goods,this thesis analyzes the total trade imbalance,the structure and the comparative advantages of China-India trade.This thesis uses the local equilibrium model to study the relationship between China's and India's import,export,trade revenue and expenditure and real GDP of China,real GDP of India,and real effective exchange rate of RMB against rupees.At the same time,China's accession to WTO,2005 RMB exchange rate system reform,the impact of FDI on the trade balance and on the import and export of China and India will also be analyzed.Based on the Chinese HS classification commodity data,this thesis analyzes the relationship between the HS and China's real GDP,India's real GDP,the practically effective exchange rate between RMB and rupees.From the results of the empirical studies,it can be find that the complementary is greater than rivalry in the China-India trade.Exchange rate has little impact on China and India's import,export,trade revenue and expenditure,while the economic growth in India and China remains the main cause and secondary cause to import,export,trade revenue and expenditure of China and India.Introducing and the RMB exchange rate reform in 2005 as the virtual variables into China-India trade balance model is robust 'introduces China's accession to WTO as the virtual variables and FDI into China-India trade balance model causes deviation and error.The virtual variables of China's 2005 reform of the RMB exchange rate,the virtual variables of China's accession to the WTO and the-introduction of FDI into the sino-indian trade balance model are robust.Supply factors have significant asymmetries in the impact of China's export and import of HS-classified goods to and from India.Demand factors have certain asymmetries in the impact of China's export and import of HS-classified goods to and from India.Exchange rate has basic symmetries in the impact of China's export and import of HS-classified goods to and from India.Based on the above-mentioned analysis conclusion,solutions to the trade imbalance between China and India are put forward from the point of exchange rate,government and enterprises.In terms of Exchange rate,the stability of exchange rate between RMB and rupees should be kept to avoid the appreciation or devalue in a short term,and to further promote the mechanism reform of RMB exchange rate.In terms of government,the communication between Chinese and Indian governments should be strengthened;the political mutual trust should be improved;industry structure and trade structure should be quickly optimized and upgraded to increase the products competitiveness;the complementary of China-India trade should be strengthened and India's export to China should be encouraged;the benefits of China should be protected through WTO Dispute Settlement Mechanism.In terms of enterprises,foreign direct investment should be increased.At the same time,we should strengthen the study and mastery of Indian law,economic policy,development situation and culture...