The Effect of China's Exchange Rate Policy on U.S. Textile Imports

This paper seeks to evaluate the effect of China's exchange rate policy on the United States' textile imports between May, 2001 and December 2010. The effect of the yuan/dollar exchange rate on textile imports is tested using a multiple regression model that incorporates both macroeconomic and microeconomic regressors. The analysis reveals that changes in China's exchange rate have not had a statistically significant effect on the percentage change in the United States' textile imports from China. Most of the changes in textile imports have arisen from changes in production costs for Chinese firms.