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The bilateral real exchange rates and trade between China and the U.S

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  • BAAK, SaangJoon

Abstract

This paper examines the impacts of the real exchange rates between the renminbi and the US dollar on the trade between the two countries. Because various tests with the quarterly data from 1986Q1 to 2006Q2 imply a structural break around 1994Q1, the export equations are estimated using the quarterly data from 1995Q1 to 2006Q2. According to the estimation of cointegrating vectors, 1% depreciation of the renminbi raises the Chinese exports to the US by 1.7%, while 1% depreciation of the US dollar raises the US exports to China by around 0.4%.

Suggested Citation

  • BAAK, SaangJoon, 2008. "The bilateral real exchange rates and trade between China and the U.S," China Economic Review, Elsevier, vol. 19(2), pages 117-127, June.
  • Handle: RePEc:eee:chieco:v:19:y:2008:i:2:p:117-127
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    References listed on IDEAS

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    Cited by:

    1. Du, Yuxin & Teixeira, Aurora A.C., 2012. "A bibliometric account of Chinese economics research through the lens of the China Economic Review," China Economic Review, Elsevier, vol. 23(4), pages 743-762.
    2. Baak, SaangJoon, 2014. "Do Chinese and Korean products compete in the Japanese market? An investigation of machinery exports," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 256-271.
    3. Chi, Junwook, 2016. "Exchange rate and transport cost sensitivities of bilateral freight flows between the US and China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 89(C), pages 1-13.
    4. Liao, Wei & Shi, Kang & Zhang, Zhiwei, 2012. "Vertical trade and China's export dynamics," China Economic Review, Elsevier, vol. 23(4), pages 763-775.
    5. James Xiaohe Zhang, 2011. "RMB Appreciation or Fiscal Stimulus, and their Policy Implications," Chapters,in: China’s Economy in the Post-WTO Environment, chapter 9 Edward Elgar Publishing.
    6. Hongjin Xiang & Zheng Zhan & Mingyong Lai, 2011. "The trade destruction effect and trade diversion effect of RMB appreciation," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(3), pages 479-493, September.
    7. Gozgor, Giray, 2014. "Aggregated and disaggregated import demand in China: An empirical study," Economic Modelling, Elsevier, vol. 43(C), pages 1-8.
    8. repec:fis:journl:170302 is not listed on IDEAS
    9. repec:eee:japwor:v:44:y:2017:i:c:p:26-34 is not listed on IDEAS
    10. Bhattarai, Keshab & Mallick, Sushanta, 2013. "Impact of China's currency valuation and labour cost on the US in a trade and exchange rate model," The North American Journal of Economics and Finance, Elsevier, vol. 25(C), pages 40-59.
    11. Wang, Chun-Hsuan & Lin, Chun-Hung A. & Yang, Chih-Hai, 2012. "Short-run and long-run effects of exchange rate change on trade balance: Evidence from China and its trading partners," Japan and the World Economy, Elsevier, vol. 24(4), pages 266-273.
    12. Tsuchiya, Yoichi, 2016. "Asymmetric loss and rationality of Chinese renminbi forecasts: An implication for the trade between China and the US," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 116-127.
    13. Baek, Jungho, 2014. "Exchange rate effects on Korea–U.S. bilateral trade: A new look," Research in Economics, Elsevier, vol. 68(3), pages 214-221.

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