The Effect of Exchange Rate Changes on China's Labor-Intensive Manufacturing Exports
AbstractChinese policymakers have resisted calls for faster renminbi appreciation partly because they fear it will reduce low technology exports. We investigate this issue using a panel data set including China's exports of labor-intensive goods to 30 countries. We find that an appreciation of the RMB would substantially reduce China's exports of clothing, furniture, and footwear. We also find that an increase in foreign income, an increase in the Chinese capital stock, and an appreciation among China's competitors would raise China's exports. Since Europe is the second leading exporter of labor-intensive manufactures behind China, these results indicate that the large appreciation of the euro relative to the RMB since 2001 has crowded out European exports.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 08038.
Length: 22 pages
Date of creation: Nov 2008
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Other versions of this item:
- Willem Thorbecke & Hanjiang Zhang, 2009. "The Effect Of Exchange Rate Changes On China'S Labour-Intensive Manufacturing Exports," Pacific Economic Review, Wiley Blackwell, vol. 14(3), pages 398-409, 08.
- NEP-ALL-2008-11-18 (All new papers)
- NEP-CNA-2008-11-18 (China)
- NEP-INT-2008-11-18 (International Trade)
- NEP-TRA-2008-11-18 (Transition Economics)
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