Appreciation effects of Chinese Yuan exchange rate on world grain markets: A spatial equilibrium analysis of three products
2006
Zhu, Z.G.(Kyushu Sangyo Univ., Fukuoka (Japan)) | Maeda, K. | Kawaguchi, T.
The purpose of this paper is to estimate effects of Chinese YUAN exchange rate appreciation on world grain markets. A new spatial equilibrium model for international trade of three products is developed. The model can analyze substitution among products in addition to tariff quota system and transportation cost. By using the model, we estimate appreciation effects of Chinese YUAN exchange rate on world markets of rice, wheat and corn. Main results of estimation are the followings: 1. The effect on world wheat market will be very small, because China will increase a small amount of wheat import under the tariff quota system. 2. China will increase the amount of corn import up to tariff quota. However, the increase in China will be covered by increase of production and export in U.S.A. Therefore, the effect on world corn market will be limited. 3. The effect on world rice market will be serious, especially in developing countries, India, Bangladesh and Indonesia, because China will decrease a large amount of rice export.
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