Effects of RMB Exchange Rate Fluctuation on China's Trade Surplus: An Empirical Research Based on the Data of Main Trade Partners

This paper investigates the relationship among exchange rate changes and trade balances between China and its five main trade partners.It analyzes the effects of both the trend of exchange rate changes and the risk of fluctuations on bilateral trade balance and the effects of the two main economic events,including China's entry to WTO in 2001 and the second exchange rate policy reform in 2005.The results indicate that the effects of the trend of exchange rate changes on the adjustment of bilateral trade balance are not remarkable.However,the fluctuation of exchange rate has significant effects on the adjustment of bilateral trade balance.China and its trade partners' economic conditions have more significant effects on the change of trade balance.The results also indicate that China's entry to WTO exerts remarkable effects on the adjustment of bilateral trade balance.However,the effect of China's exchange rate policy reform on the adjustment of trade balance has not been proven.