The Research of the Reasons of RMB Appreciation and the Effects of RMB Appreciation on China’s Foreign Trade

In 2005，RMB exchange rate reformed. Up to now, RMB exchange rate has appreciated nearly 34%. RMB appreciation is bound to have its internal causes and external causes. RMB appreciation is also bound to have some impacts on China's foreign trade. Firstly, the paper analyzes the reasons of RMB appreciation. Secondly, the paper analyzes the positive and negative effects of RMB appreciation on China’s foreign trade. The beneficial aspects including: RMB appreciation will help to reduce prices of import goods, thereby reducing imported inflation. At the same time, it will help to reduce trade friction between China and other countries, etc. The negative aspects including: RMB appreciation reduces the competitiveness of export commodities, so it has a negative impact on exports. Simultaneously, RMB appreciation reduces the price of foreign goods, so China may increase imports of foreign goods. The situation is not conducive to the growth of domestic enterprises, etc. Finally, the paper proposes countermeasures against the influence of RMB appreciation on China’s foreign trade.