Analysis of the Causes and the Consequences of Consecutive RMB Appreciation

Shuixiang Luo, Yue Zhang, Meilin Hu, Yuhong Li

Business School, Jinggangshan University, Ji’an, China.
College of Economy and Management, Anqing Normal University, Anqing, Chin.
Finane Office, Jinggangshan University, Ji’an, China.
Jilin University of Finance and Economics, Changchun, China.

DOI: 10.4236/jfrm.2014.31001                

Abstract

Since the reform and opening-up, China’s foreign trade has obtained at breakneck speed, and in the international competition accumulated the massive trade surplus and foreign exchange reserves. That makes some western countries claim that the value of RMB was severely underestimated, which brought about unprecedented and consecutive appreciation pressure of RMB. The appreciation of RMB is highly related to the balance of the internal and external economics. This paper analyzes the background and the impact on Chinese economy of RMB appreciation, and then puts forward some recommendations or strategies accordingly.

Keywords

RMB Appreciation; Exchange Rate; Import and Export

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	Bei, D. G., & Zhu, X. L. (2008). A New Monetary Phenomenon: An Analysis of the Co-Existence of the External Appreciation and the Domestic Inflation of RMB. Frontiers of Economics in China, 6, 327-355. http://dx.doi.org/10.1007/s11459-008-0016-6
[2]	Chow, E. H., & Yang, W. Y. (2010). Stock Return and Exchange Rate Risk: Evidence from Asian Stock Markets Based on a Bivariate GARCH Model. International Journal of Business, 2, 97-117
[3]	Feenstra, R. C. (1987). Symmetric Pass—Through of Tariffs and Exchange Rate under Inperfect Competition: An Empirical Test. NBER Working Paper.
[4]	Feng, Z. Q., & Yang, X. X. (2007). Analysis of Impact of RMB Exchange Rate on China’s Foreign Trade Structure. Economic Survey, 4, 42-44
[5]	Liu, X. H., & Fan, C. L. (2010). The Model and Empirical Estimation of the Optimal Flexibility of RMB Exchange-Rate Regime: A Study Based on the Price-Stabilization. Frontiers of Economics in China, 5, 187-209. http://dx.doi.org/10.1007/s11459-010-0010-7
[6]	Ma, H. M. (2007). RMB Exchange Rate Is a New Opportunity for the Development of China’s Foreign Trade. Economic Research Group, 8, 188-189.
[7]	Xiang, H. J., Zhan, Z., & Lai, M. Y. (2011). The Trade Destruction Effect and Trade Diversion Effect of RMB Appreciation. Frontiers of Economics in China, 6, 479-493. http://dx.doi.org/10.1007/s11459-011-0143-3
[8]	Yang, W., & Lam, K.-C. J. (2012). An Ethical Analysis of Economic Issues Related to the Appreciation of Renminbi. Asian Journal of Business Ethics, 1, 79-87. http://dx.doi.org/10.1007/s13520-011-0008-y