By Wang Bingwen, Institute of Public Administration and Human Resources, DRC

Research Report, Special Issue, No.74, 2019 (Total 1702)

2019-9-25

Abstract: The United States has attributed its huge trade deficit with China to the RMB exchange rate that is not fully market-oriented, and even listed China as a country of “currency manipulation” recently. To clarify the facts, this paper has made theoretical analyses on impacts of the exchange rate on trade through analyzing the Sino-U.S. trade and changes of the RMB exchange rate. It has also illustrated the impacts of RMB exchange rate on Sino-U.S trade based on panel data of Harmonized System for the classification of products in trade between the two sides. Research findings show that deep-seated causes of the U.S. trade deficit with China lie not in changes of the RMB exchange rate but different industrial structure and trade value of the two sides. To improve Sino-U.S. trade relations and gain an advantageous position in the Sino-US trade frictions, China needs to implement such measures as maintaining RMB exchange rate fluctuation within an appropriate range, promoting market-oriented reform of the RMB exchange rate, advancing industrial restructuring to improve trade structure, encouraging consumption and expanding domestic demands to promote high-quality development of foreign trade .

Key words: RMB exchange rate, trade deficit, trade structure