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China's exchange rate reform and exports

Zhang, Z.



The paper argues that exchange rate reform is a vital supply-side factor in China's export growth. It contributes to China's export expansion by affording a realistic exchange rate and allowing freer access to foreign exchange, thereby leading to the reduction of anti-export bias and strong supply response. In an imperfect substitutes model, China's long-run export supply and demand functions are estimated in a system context. Evidence is found that the exchange rate reform is one of the most influential factors in China's long-run export expansion, inducing significant response of exports supply. In the short-run, the exchange rate reform and the export volume are also cross-linked through the error-correction process. China's exchange rate policy adjusts speedily to ensure the long-run equilibrium of the supply-side relationship and is likely to have played a dominant role in the adjustment. The study confirms, thanks to the exchange rate reform, China's exchange rate policy has benefited China's remarkable growth of exports before 1994.


Zhang, Z. (2001). China's exchange rate reform and exports. Economics of planning, 34(1-2), 89-112.

Journal Article Type Article
Publication Date 2001-01
Deposit Date Mar 22, 2007
Journal Economics of Planning
Print ISSN 0013-0451
Electronic ISSN 1573-0808
Publisher Springer
Peer Reviewed Peer Reviewed
Volume 34
Issue 1-2
Pages 89-112
Keywords Economic reform, Exchange rate policy, Exports, Cointegration analysis.
Public URL