An empirical analysis of the relationship between the Sino US trade surplus and the RMB exchange rat

1 **Surplus. The so-called surplus refers to the fact that the total amount of exports of a country is greater than the total amount of imports in a specific year, also known as "excess", which means that the country is in a favorable position to foreign countries in that year. The size of the surplus largely reflects a country's external activity in a given year.

Under normal circumstances, it is not advisable for a country to have a large external surplus for a long time, because this move can easily cause friction with the relevant partner countries. For example, one of the main reasons for the market volatility in the bilateral relationship between the United States and Japan is that Japan has been in a huge surplus for a long time. At the same time, a large amount of foreign exchange surplus usually leads to a corresponding increase in the amount of local currency in a country's market, which is likely to cause inflationary pressure, which is not conducive to the sustained and healthy development of the national economy.

The U.S.-China ** surplus refers to the phenomenon that China's exports to the United States to the United States exceed the amount of imports for a certain period of time (usually calculated on an annual basis).

In 2018, China's surplus with the United States was 100 million US dollars, of which exports were 100 million US dollars, an increase; imports increased by $155.1 billion.

In 2017, China's surplus with the United States was one trillion yuan (RMB), with a total value of one trillion yuan, of which China's exports to the United States were one trillion yuan, and imports from the United States were trillion yuan, an increase of 13%.

The U.S.-China surplus means that China exports more goods to the U.S. than it imports from the U.S.

China-U.S. ** surplus data The data of China and the United States differ due to their different statistical methods - the United States believes that there is $300 billion, while China's statistics are more than $200 billion.

Shocking, China's export data to the United States for more than ten years.

From the U.S. Bureau of Economic Analysis, official**.

Unit: US$ million.

Among them, China's exports to the United States in 2018 were 558309 million US dollars, in 2019, China's exports to the United States were 471129 million US dollars, a year-on-year decrease of 15%, and in 2020, China's exports to the United States were 450392 million US dollars, a year-on-year decrease of 4%.

How much impact can the change in the RMB exchange rate have on the balance of payments between China and the United States, and can the appreciation of the RMB become an effective means to reduce the surplus between China and the United States? If the RMB exchange rate is not the main reason for the Sino-US surplus, then how did the huge Sino-US surplus come about? Through the empirical analysis of the factors such as the bilateral external real exchange rate and the China-US surplus, this paper finds that the exchange rate problem is not the main cause of the Sino-US surplus.

According to the conclusion of the empirical analysis, on the basis of the research, the real reasons and essence behind the Sino-US surplus are explored.

RMB exchange rate Sino-US ** difference FDI ** transfer.

1. An empirical analysis of the correlation between the exchange rate and the China-US ** surplus.

According to the principles of economics, according to the direct pricing method, the exchange rate falls, the national currency appreciates, the export capacity decreases, imports increase, and net exports decrease. The change in imports** caused by exchange rate changes is often incomplete, i.e., the exchange rate pass-through coefficient is not equal to 1. Due to this incomplete transitivity of the exchange rate, the effect of depreciation will not be as obvious as the traditional theory suggests.

In other words, a depreciation of the exchange rate will not significantly improve a country's balance of payments. The following econometric model is intended to illustrate the correlation between changes in external real exchange rates and ** differences.

The data from the first quarter of 2001 to the first quarter of 2010 were selected for empirical analysis and testing. The nominal exchange rate of RMB against the US dollar, the quarterly data of the US CPI, the quarterly nominal GDP data of the United States, and the quarterly nominal GDP of China are calculated from the quarterly CPI data of the Bloomberg database, with the first quarter of 2001 as the base period and the base number of 100.

First, the Sino-US pattern is the result of the international industrial division of labor under the conditions of economic globalization. For more than half a century, the industrial structure of the United States has been continuously upgraded to high-end manufacturing and modern service industries, and traditional labor-intensive industries have been transferred abroad. Under the current pattern of international division of labor, even if the United States restricts imports from China, it will be difficult for the traditional manufacturing industry to return, and it can only seek substitution from other developing countries.

Second, the extent of the US deficit with China is clearly overestimated. The United States and China have jointly released a research report on statistical differences in cargo**. The main reasons for the statistical discrepancy are: first, the value-added part of goods originating in China in the process of re-exporting to the United States through other economies is calculated as a surplus with China; Second, in the processing of exports to the United States, the import declaration of the United States is higher than that of China's export declaration, which in turn pushes up China's surplus.

According to the results of the study, the actual deficit of the United States with China in 2009 should be reduced by about $60 billion on the basis of the data released by the United States. Third, U.S. export controls on China have exacerbated bilateral imbalances. The United States has long imposed export controls on China, and in 2007 it added 47 export control items to China, forcing Chinese users to abandon imports of American products.

In recent years, the proportion of China's imports of high-tech products from the United States has dropped from 18.3 in 2001 to 7.5 in 2009, and if the proportion of imports in 2001 is extrapolated, the United States will lose at least $33 billion in exports to China in 2009. In the case of limited exports of advantageous products of the United States, the difference between China and the United States is not a true reflection of the competitiveness of both sides. Fourth, the long-term U.S. deficit is related to the dollar's status as a major international currency.

The "Triffin conundrum" is the intrinsic cause of the collapse of the Bretton Woods system. At present, the US dollar is still facing the dilemma of providing liquidity to the world through a current account deficit and ensuring the stability of the dollar. Fifth, the RMB exchange rate cannot solve the imbalance between China and the United States.

From 2005 to 2008, the renminbi appreciated against the US dollar by 21 1, and the deficit of the United States with China increased by 21 6 per year during the same period, which was the largest and fastest growing period in history. In 2009, the exchange rate of the renminbi against the US dollar remained stable, while the US ** deficit and the deficit with China fell by 16 1. It can be seen that the decisive factor of ** flow is market supply and demand, not exchange rate.

China policy.

China has maintained a surplus since 1994 and the surplus has been on the rise, reaching $177 billion in 2006. There are two reasons for this difference, both internally and externally. Therefore, it should be addressed by adopting two different types of policies, internal and external.

In terms of external factors, it is mainly caused by the three major policies of the United States towards China, namely, the export control policy, the embargo policy and the non-market economy status policy. China's foreign trade surplus is actually just a surplus with the United States. China's surplus in 1995 was US$16.7 billion, of which the surplus with the United States was US$100 million, accounting for 45%; In 2000, it was 100 million US dollars, of which the surplus with the United States was 100 million US dollars, accounting for 81%; In 2005, it was $102 billion, while the surplus with the United States reached $100 million, exceeding the overall surplus of $100 million.

That is to say, in addition to maintaining a surplus with the United States, China is still in deficit for all other partners. It can be seen from this that the so-called solution to China's most unbalanced problem is mainly to solve the problem of imbalance between China and the United States. And this problem is caused by the three major policies implemented by the United States.

In terms of internal factors, it is mainly caused by the low value of the renminbi on the basis of the three low policies, namely low labor cost, low resource cost and low environmental cost. China's foreign trade surplus does not reflect the competitiveness of Chinese goods. If the "four lows" are changed to the "four highs" policy, China's surplus will disappear immediately.

Of course, such a one-time approach will certainly not work. At least two steps should be taken: first solve the first three lows, expand domestic consumer demand, scientifically and rationally use resources, and govern the environment; Then, the renminbi will gradually appreciate.

This will help to coordinate domestic and foreign interests. The exchange rate is the currency **, which is the sum of all commodities**. China should solve the problem of too low labor, too low resources, and too low environment as soon as possible.

Only in this way can the true face of the value of the renminbi be revealed, so as to calm the quarrels at home and abroad on issues such as the renminbi exchange rate and China's surplus, and also be conducive to international balance.

That is to say, the faster the RMB appreciation, China's labor force will rise, the cost of foreign enterprises will rise, the more unfavorable it will be to the introduction of foreign capital, and China's GDP will be affected, just like Japan in the past.