Exchange-rate Effects on China's Trade *Jaime Marquez and John Schindler Review of International Economics, 2007, vol. 15, issue 5, pages 837-853 Abstract: Though China's share of world trade exceeds that of Japan, little is known about the response of China's trade to changes in exchange rates. The few estimates available have two limitations. First, the data for trade prices are based on proxies for prices from other countries. Secondly, the estimation sample includes the period of China's transformation from a centrally-planned economy to a more market-oriented one. We address these limitations with an empirical model explaining the shares of China's exports and imports in world trade in terms of the real effective value of the renminbi. The specifications control for foreign direct investment and for the role of imports of parts to assemble exports. Parameter estimation uses disaggregated monthly trade data and excludes China's decentralization period. We find that a 10 percent real appreciation of the renminbi lowers the share of aggregate Chinese exports by nearly one percentage point. However, the estimated response of imports is negligible and lacks precision. Copyright © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd. Downloads: (external link) Related works: Ordering information: This journal article can be ordered from Access Statistics for this article Review of International Economics is edited by E. Kwan Choi More articles in Review of International Economics from Blackwell Publishing |
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