An Empirical Analysis of RMB Exchange Rate and GDP's Impact on Sino-US Trade

According to quarterly data of US and China from 1999Q1to 2013Q4,we built a VAR model and did co-integration test to fit the correlation among RMB real effective rate against the USD dollar,US trade deficit with China,and income levels of US and China.The result proved that it was not the undervaluation of the RMB that led to American trade deficit.The article then built an AmericanImport-Demand model and an American-Export-Supply model,and the result showed that per 1000mil.Dollars added to GDP of US would lead to a 1.74mil.Dollars increase in US import turnover from China;similarly,per 1000mil.Dollars added to GDP of China would lead to a 1.94mil.This proves that it is the effect of market supply-demand that cause US trade deficit with China,and the RMB exchange rate is not the main reason.