RMB Exchange Rate Pass-Through into Import Prices of China’s Logs: From the Perspective of Reforms of Exchange Rate Regimes

Exchange rate is a vital factor influencing trade prices of a country. Logs are important raw materials and imported products in China, and their import prices have a significant influence on the domestic timber market and forest products industry. The research on exchange rate pass-through (henceforth ERPT) into import prices of China’s logs is an important basis for exploring the fluctuation law of domestic timber market prices. Based on the monthly data from January 2004 to June 2019, considering the reforms of exchange rate regimes, this paper uses the ARDL model to calculate the ERPT into import prices of China’s logs in the long and short run. The results show that RMB exchange rate movements cause movements of log’s import prices in the opposite direction; the ERPT is incomplete in the short run and greater than 1 in the long run; two reforms of RMB exchange rate regimes have an effect on the ERPT into import prices of China’s logs, but in a slight manner. Finally, this paper puts forward some suggestions such as establishing a detection and early warning system for timber prices, strengthening the establishment of domestic timber reserve forests, and increasing the degree of decentralization of the log import market.