The Impact of the Chinese Exchange Policy on Foreign Trade with the European Union

Ana Cardoso () and António Portugal Duarte
Additional contact information
Ana Cardoso: Faculty of Economics, University of Coimbra, Portugal

No 2015-09, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: The aim of this paper is to analyze the impact of the Chinese foreign exchange policy on foreign trade with the European Union. After describing the importance of the exchange rate in an open economy and some of the methodologies employed to calculate its equilibrium value, we examine whether the Chinese competitiveness is due to the existence of misalignment (undervaluation) of its exchange rate, or rather, to other sources of competitiveness. For this purpose, we use a Vector Error Correction (VEC) model to estimate a long-run exports equation. The empirical results indicate that over the past few years, Chinese exports have benefited from an ‘unfair’ competitive advantage resulting from the manipulation of its currency value.

Keywords: Competitiveness; China; European Union; foreign trade; misalignments; real exchange rate. (search for similar items in EconPapers)
JEL-codes: C39 F10 O24 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2015-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://repec.uc.pt/gmf/wpaper/wpgemf/gemf_2015-09.pdf (application/pdf)

Related works:
Journal Article: The impact of the Chinese exchange policy on foreign trade with the European Union (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gmf:wpaper:2015-09

Access Statistics for this paper

More papers in GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra Contact information at EDIRC.
Bibliographic data for series maintained by Sofia Antunes ().