Abstract This paper explores the relationships between the change of RMB exchange rate and trade balance of China from the point view of exchange rate pass-through. As conclusions, we find, Firstly, the effects of the RMB exchange rate appreciation and depreciation on trade balance are asymmetric, that is to say, there are almost no effects on the trade balances of the primary goods, industrial goods and gross goods with the RMB exchange rate appreciation, and there are significant effects on the trade balances of the industrial goods and gross goods with the RMB exchange rate depreciation, but there are no effects on the trade balances of the primary goods. Secondly, there are almost no effects on the net imports of the primary goods with RMB exchange rate changes because of the rigid demand for primary goods such as metal mineral sand, coal and oil, and the scarcity for making a price to scarce resource in international market. Besides, the RMB exchange rate depreciation deteriorates the trad
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Received: 15 October 2010
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