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Revaluation of the Chinese Yuan and triad trade: A gravity assessment

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  • Yu, Miaojie
Abstract
The literature had paid little attention to the endogenous nexus between exchange rates and bilateral trade. In this paper, I use a gravity model to investigate the two-way causality between exchange rates and bilateral trade with data from China, Japan, and the United States during the 2002-2007 period. After controlling for the simultaneous bias between exchange rates and bilateral trade, the extensive empirical evidence shows that the revaluation of the Chinese Yuan against the dollar significantly reduced China's exports to the United States but had no significant effects on China's exports to Japan. These findings are robust to different measures, econometric methods, and period coverage.

Suggested Citation

  • Yu, Miaojie, 2009. "Revaluation of the Chinese Yuan and triad trade: A gravity assessment," Journal of Asian Economics, Elsevier, vol. 20(6), pages 655-668, November.
    • Handle: RePEc:eee:asieco:v:20:y:2009:i:6:p:655-668
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    Cited by:

    1. Miaojie Yu, 2010. "Processing Trade, Firm's Productivity, and Tariff Reductions : Evidence from Chinese Products," Macroeconomics Working Papers 22799, East Asian Bureau of Economic Research.
    2. Wing-Choong Lai & Kim-Leng Goh, 2019. "Impact of Chinese Yuan Devaluation on the Dependence Structure: The Archimedean Copula Approach," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(01), pages 1-27, March.
    3. Biswajit Banerjee & Haiyan Shi & Jan Radovan & Yingying Sheng & Xin Li, 2017. "The Impact of the Exchange Rate and Trade Composition on China’s Trade Balance Vis-à-Vis Selected Partner Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(3), pages 311-344, September.
    4. Wing-Choong Lai & Kim-Leng Goh, 2021. "Dependence Structure Between Renminbi Movements and Volatility of Foreign Exchange Rate Returns," China Report, , vol. 57(1), pages 57-78, February.
    5. Yao Amber Li & Jenny Xu & Carol Zhao Chen, 2015. "Import Response to Exchange Rate Fluctuations: A Micro-level Investigation," HKUST IEMS Working Paper Series 2015-27, HKUST Institute for Emerging Market Studies, revised May 2015.
    6. Sun, Sizhong, 2012. "The role of FDI in domestic exporting: Evidence from China," Journal of Asian Economics, Elsevier, vol. 23(4), pages 434-441.
    7. Miaojie Yu, 2010. "Does Appreciation of the RMB Decrease Imports to the U.S. from China?," Trade Working Papers 22040, East Asian Bureau of Economic Research.
    8. Zheng, Yafei & Shao, Yanmin & Wang, Shouyang, 2017. "The determinants of Chinese nonferrous metals imports and exports," Resources Policy, Elsevier, vol. 53(C), pages 238-246.
    9. Masoud Moghaddam & Jie Duan, 2017. "Currency Manipulations and Bilateral Trade Between China and the USA," Foreign Trade Review, , vol. 52(3), pages 171-184, August.

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