Research on the Relationship between China’s Import and Export Trade and Confidence Index–Dynamic Analysis based on VAR Model

Abstract

With the deepening of globalization, changes in China's import and export trade will affect consumers' plans for saving and consumption in the future, thus affecting China's development strategy of internal circulation. In order to explore the influence relationship between China's import and export trade and consumer confidence, VAR model is built to conduct empirical analysis on the relationship between total import, total export and consumer confidence index. Moreover, the short-term dynamic change relationship between variables is further explored through impulse response function and variance decomposition analysis. The empirical results show that there is a certain degree of correlation between China's import and export trade and confidence index. To be specific, in the early stage, the change of trade import and export will have a negative impact on consumer confidence, while the impact of consumer confidence index on trade export volume has a lag. Therefore, the Chinese government should continue to pay attention to the development of the real economy and guide and encourage the real enterprises to realize the optimization and upgrading of industrial structure. The government should also actively guide consumers to consume healthily so as to accelerate the construction of the new development pattern of “double cycle”.