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Impact of Real Effective Exchange Rate of RMB on China’s Value Adding in Global Value Chains
Yu-Xin Ke1*
1Xiamen University Tan Kah Kee College, Xiamen 363105, China
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Abstract:
The global value chain is a production and supply network that crosses national borders and connects businesses, institutions, and individuals from different countries to create value and produce goods and services. China is an important part of the global value chain, and its position in it has gradually improved. There is a close relationship between the global value chain and currency exchange rates. Studying the impact of RMB exchange rate fluctuations on China’s added value of global value chains is of great significance for a deeper understanding of China’s internationalization process and competitiveness in the global value chain. Based on the global value chain in trade, a regression analysis is conducted on the added value of China in the global value chain. The real effective exchange rate of RMB is used as the interpretation variable, and foreign direct investment, gross domestic product, and consumer price index are included as the control variables in the analysis. The results show that the rise of China’s real effective exchange rate significantly influences the added value in the global value chain even in the global financial crisis of 2008 and the appreciation of the exchange rate improves the production efficiency of China’s processing and manufacturing export companies.
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Keywords: REER, Added value, Global value chain, Vector autoregressive model, Production efficiency
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Received:October 30, 2022; Revised:November 17, 2022; Accepted:November 30, 2022; Published:December 30, 2022
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*Corresponding author; e-mail: Poppyke1119@gmail.com
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Citation:Ke, Y.X.(2022). Impact of Real Effective Exchange Rate of RMB on China’s Value Adding in Global Value Chains. International Journal of Business Studies and Innovation, 2(4), 31-46. https://doi.org/10.35745/ijbsi2022v02.04.0004
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Copyright: ©
2022
The Author(s). Published with license by IIKII, Singapore. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (CC BY), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
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