Analysis of the competitiveness of the Yuan and its impact on Chinese-American trade balance resulte: An empirical study for the period (2000-2022)

Abstract

This research examines how fluctuations in the Real Effective Exchange Rate (REER) of the Yuan (Renminbi) influence the trade balance between China and the United States.Utilizing quarterly time series data from the first quarter of 2000 to the fourth quarter of 2022,we apply an Autoregressive Distributed Lag (ARDL) model, with China's and the United States' GDP as control variables. The results indicate a positive correlation between the Yuan’s REER and China's trade surplus with the United States over the study period. Moreover, China's GDP shows a negative relationship with its trade balance, whereas the GDP of the United States is positively associated with China's trade surplus with the U.S.