Research on the Impact of the Fluctuation of RMB Exchange Rate on China’s Import and Export Trade

Abstract

With the economic globalization and trade liberalization in today’s society, exchange rate plays a more and more important role. As a tool to regulate the international economy and achieve the balance of internal and external economy, its fluctuation will have an important impact on international trade. Since the exchange rate reform in July 2005, the exchange rate of RMB against the U.S. Dollar has appreciated nearly 25%, and the elastic float and the fluctuation are gradually expanding. Its impact and function on international trade are becoming increasingly apparent. With analysis of the impact of RMB exchange rate changes on China's import and export trade from the perspective of gross macro-economic, taking the import and export quarterly data from 2000 to 2015 as the sample, by using VAR model, co-integration test and Granger causal relation test, this paper explores and calculates the long-term, equilibrium and dynamic impact of RMB real effective exchange rate on China's import and export trade and the causal relationship between them. The results show that there is a significant correlation between RMB real effective exchange rate and China’s import and export.