Dissertation > Economic > Trade and Economic > States foreign trade > China's foreign trade

The Appreciation of the RMB Exchange Rate’s Influence on China Foreign Trade and Countermeasures

Author DuAiHu
Tutor ChenXiaoLi
School Shandong University
Course Financial Engineering
Keywords appreciation of RMB exchange rate foreign trade influence
CLC F752
Type Master's thesis
Year 2011
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Exchange rate, as an important regulator in the international trade, has become one of the critical means of reverse the disadvantage between two countries. With the upgrading of China’s international status, China’s international trade surplus increased significantly, which also led to major trading partners, such as the United States, Japan, European Union, continue to give the pressure of RMB appreciation with the hope of changing the trade relationship. What impacts will the exchange rate changes make on the international trade? Since the 1990s, researchers have started its research. However, due to different data selection period, different economic conditions, combined with academic research tools, methodologies and analytical tools used, there are three different conclusions, even opposite.From 1980 to 2010, the RMB exchange rate has experienced four reforms, and each reform affected China’s foreign trade balance.1980-1994, China adopted a policy to devalue the RMB exchange rate. Because of severe depreciation of the RMB exchange rate, Chinese export trade increased, both export variety, and quantity proliferation, thus contributing to the increase in export volume. At the same time, due to the increase in the cost of imports, in addition to some imported goods and raw materials must be outside, Chinese imports decreased significantly. From January 1,1994, the RMB exchange rate rose slightly. However, because of Chinese economic growth and tax policy at that time, import and export in China during 1994 to 2005 had not diminished but rather increased, the trade surplus increased significantly.2005-2010’statistics showed that appreciation of RMB did not give too much influence to Chinese exports.In order to imply the relationship between appreciation of RMB and Chinese foreign trade, the paper conducts an empirical study, which gets an conclusion in accord with the qualitative analysis that appreciation of RMB did not give too much influence to Chinese foreign trade.

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