Research On The Impact Of Currency Swap On Terms Of Trade Between China And The Countries Under Agreements

Terms of trade is a key indicator to measure the quality and income of a country’s foreign trade,which reflects the distribution of trade interests among countries.China’s foreign trade has developed rapidly since the reform and opening up.The scale of foreign trade is constantly expanding,and the international market share is constantly increasing.However,while such achievements have been made,some problems have also been exposed.One of the prominent phenomena is that in recent years,China’s overall price terms of trade have tended to deteriorate,China’s foreign trade has fallen into the dilemma of increasing quantity without increasing revenue,and China’s economy is also facing the tendency of impoverished growth.Therefore,as a major trading country,how to improve the quality of trade,increase trade income and transform China into a trading power is worthy of in-depth study.In the context of complex and changeable international trade environment,improving the terms of trade to improve the quality of trade is the key to solve the problem,and the improvement of the terms of trade is inseparable from the support of monetary and financial cooperation.As a more effective financial innovation tool in the primary stage of monetary cooperation,currency swap is of great significance to the stable development of international financial market,the development of bilateral trade and the construction of a new development pattern of domestic and international dual circulation,but its impact on the terms of trade remains to be further discussed.In recent years,a great deal of research has been done in the field of currency swap,focusing on the comparative analysis of the motivation and role of currency swap in the United States,China and other countries,but the research results mainly focus on the theoretical level.In the field of terms of trade,there are a lot of research results on the measurement,changing trends and influencing factors of terms of trade,but most of the existing research focuses on the general terms of trade of a country,less attention is paid to the terms of trade between one country and another.With the acceleration of currency swap,scholars begin to pay attention to the impact of currency swap on bilateral trade,but the research on the impact of currency swap on terms of trade is still weak.Therefore,on the basis of previous studies,this paper discusses the impact of currency swaps on China’s price and terms of trade with the agreement countries,in order to enrich the relevant research.This paper focuses on the role of currency swap on terms of trade from three aspects:empirical facts,theoretical mechanism and empirical test.In terms of empirical facts,this paper analyzes the process,purpose,characteristics and existing problems of currency swap.Subsequently,according to the export price indexes of each country in the International Monetary Fund Database,the terms of trade between China and 24 countries(regions)under currency swap agreements from 2006 to 2018 are calculated.It is found that after signing bilateral local currency swap agreements with most countries(regions),the terms of trade between China and the countries under agreements have been significantly improved.In terms of theoretical mechanism,this paper analyzes the effect mechanism of currency swap on terms of trade,puts forward the hypothesis that currency swap can directly or indirectly affect terms of trade through two action paths of exchange rate and exchange cost,and constructs a twostate general equilibrium model to verify the rationality of the action path.In the empirical test,this paper uses the Differences-in-Differences with multiple time periods method to analyze the policy effect of currency swap on terms of trade between China and the countries under agreements.The empirical test results show that the currency swap policy can significantly improve the terms of trade between China and the countries under agreements.When the agreement is signed later,the currency swap policy has a more obvious effect on improving the terms of trade between China and the countries under agreements.At the same time,the exchange rate plays an intermediary role in the process of currency swap policy affecting the terms of trade between China and the countries under agreements.According to the above research results,this paper puts forward corresponding policy suggestions.