Does RMB Exchange Rate Cause the Sino–US Trade Imbalance?——Empirical Study Based on Data from 1995 to 2015

Abstract

This study explores the relationship between renminbi (RMB) exchange rate and the Sino–US trade balance. We firstly describe the relationship between exchange rate and trade volume through background introduction and literature review. After collecting public data, cointegration test and error correction model were used to conclude that RMB exchange rate is not the cause of Sino–US trade imbalance, and the Granger UK test was used to reinforce this conclusion. Lastly, we use summary and analysis to provide directions and requirements for future research.