DOI: 10.36347/sjebm.2015.v02i07.002

Pages: 671-676

Based on VAR model, this paper uses time series data from 1985-2013 to study the impact of RMB’s appreciation on narrowing down Sino-US trade deficit. Empirical result shows that RMB appreciation has very limited impact on narrowing down Sino-US trade deficit and it has a J curve effect. In fact the huge Sino-US trade deficit is an inevitable result of international division of labor, US economic development pattern and protectionist trade policies. To effectively solve the huge Sino-US trade deficit, US should revive real economy, encourage savings and rational consumption, and relax trade control policy to expand export to China.