AEMPS

The Impact of RMB Exchange Rate Fluctuations on China's Manufacturing Exports: An Empirical Analysis Based on Time-Series Regression Models

Author

Yuzhen Li * 1

1 The Ohio State University

Corresponding Author

Yuzhen Li

Keywords

RMB Exchange Rate, China Manufacturing Exports, Time-Series Analysis, Global Value Chains, Exchange Rate Pass-Through

Abstract

This study examines the relationship between China's export performance and exchange rate dynamics against the backdrop of global value chain reorganization and intensified external shocks. The study employed monthly data (2016-2024) and time series regression methods, and found that the explanatory power of the real effective exchange rate (REER) is limited. Time series regression confirmed that the REER coefficient was not statistically significant, which contradicted the simple "devaluation promotes exports" model. The research explains this pattern through recent evidence: (i) the role of processing trade and imported intermediate goods in shaping China's export results, where the exchange rates of supply chain economies may have as significant an impact as the RMB exchange rate; (ii) The exchange rate effect varies under different product complexities and qualities, which may weaken the average exchange rate flexibility, especially for higher-end export product baskets. (iii) The partial and asymmetric exchange rate transmission effect is influenced by the restrictions at the enterprise level and the amplification of market frictions. These findings are consistent with the reconfiguration of the global production network and the adjustment of response strategies after the pandemic, and also include "risk reduction" as well as the adjustment of trade patterns and incentive mechanisms due to geopolitical changes. Overall, these findings suggest that China's export resilience is increasingly driven by structural factors embedded in the global value chain rather than short-term exchange rate fluctuations. This indicates that models that merely focus on price competitiveness may not fully reflect the dynamic changes in modern, upgrade-oriented manufacturing exports.

Citation

Yuzhen Li. The Impact of RMB Exchange Rate Fluctuations on China's Manufacturing Exports: An Empirical Analysis Based on Time-Series Regression Models. AEMPS (2026) Vol. 259: 67-77. DOI: 10.54254/2754-1169/2026.LD31508.

References

[1]: Bhowmik, D. (2020). Determinants of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of Chinese Renminbi (RMB). London Journals Press.

[2]: Liu, J., & Xie, J. (2020). Environmental Regulation, Technological Innovation, and Export Competitiveness: An Empirical Study Based on China's Manufacturing Industry. IJERPH.

[3]: Upadhyaya, K. P., Mixon Jr, F. G., & Bhandari, R. (2020). Exchange rate volatility and its impact on China's trade with the United States. RIC.

[4]: Thorbecke, W. (2013). Investigating China's Disaggregated Processed Exports: Evidence that Both the RMB and Exchange Rates in Supply Chain Countries Matter. China & World Economy, 21(5), 1245–1260.

[5]: Chen, W., & Xing, L. (2022). Measuring the Intermediate Goods' External Dependency on the Global Value Chain: A Case Study of China. Sustainability, 14(7), 4360.

[6]: Chen, C., Salike, N., & Thorbecke, W. (2023). Exchange rate effects on China's exports: Product sophistication and exchange rate elasticity. Asian Economic Journal, 37(3), 371–400.

[7]: Chen, T., Luo, W., & Xiang, X. (2024). Exchange rate pass-through to export prices in China: Does product quality matter? Applied Economics, 56(56), 7454–7468.

[8]: Chen, T., Luo, W., & Xiang, X. (2022). Financial constraints, exchange rate changes and export price: Evidence from Chinese exporters. Financial Research Letters, Article 102823.

[9]: Jiang, B., Cai, W., & Dai, Y. (2023). Price Competition or Quality Competition? Evidence of Forest Products in Top Exporting Countries. Forests, 14(9), 1738.

[10]: Sun, J., Lee, H., & Yang, J. (2021). The Impact of the COVID-19 Pandemic on the Global Value Chain of the Manufacturing Industry. Sustainability, 13(22), 12370.

[11]: Gereffi, G. (2021). Increasing resilience of medical supply chains during COVID-19 pandemic. UNIDO Industrial Analytics Platform (IAP). (Web article).

[12]: Al-Haschimi, A., Dvořáková, V., Le Roux, J., & Spital, A. (2025). China's growing trade surplus: why exports are surging as imports stall. European Central Bank (ECB) Economic Bulletin, Focus (Issue 7/2025).

[13]: Cerdeiro, D. A., Kamali, P., Kothari, S., & Muir, D. (2024). The Price of De-Risking: Reshoring, Friend-Shoring, and Quality Downgrading. IMF Working Paper, WP/24/122.

Copyright © 2021 Eliwise Academy. Unless Otherwise Stated