BUSINESS PLAN

2021

Company Name: Fertilizer Company

Business Owner: Farhan Ali Chahwan

Declaration

I declare that the of this research paper my own work, and the research has not previously been
submitted for academic examination towards any qualification. Furthermore, it represents my own
opinions and not necessarily of university.

farhanalichahwan521@gmail.com
Signed___________________ Date________________

Abstract
This paper examines how affect exchange rate affects Chinese on GDP. First we go through the
literature about exchange rate an how it affects the GDP. We respectively analyze the
transmission mechanism of RMB real effective exchange rate on the import, export and foreign
direct investment. We use the quarterly data from 1994 to 2016 and the method of cointegration
test, Granger Causality test. From the test we found that the appreciation of RMB has a
negative effect on Chinese economic growth. Furthermore, the correlation between total export
and real effective exchange rate is negative. Meanwhile, the correlation
Between total import and real effective exchange rate is negative. For FDI, we found
that the appreciation of RMB will decrease FDI.
Key words: real effective exchange rate, economic growth, import, export, foreign direct
investment

Table of Contents

1 Introduction…………….……………………………………………………………………………………………………………………

1.1 Contextual background……………………………………………………………………………………………………………………….

1.2 Research Background………………………………………………………………………………………………………………………….
1.3 Research problems……………………………………………………………………………………………………………………………..
1.4 Research Objective……………………………………………………………………………………………………………………………..
1.5 Research Question………………………………………………………………………………………………………………………………
1.6 Significance of the Research……………………………………………………………………………………………………………....
2 Literature Review……………………………………………………………………………………………………………………………….
2.1 Exchange rate and Gross Domestic Product……………………………………………………………………………………….
2.2 Exchange rate Affect in Gross Domestic Product………………………………………………………………………………..
2.3 Summary…………………………………………………………………………………………………………………………………………....

INTRODUCTION
China is gaining more and more attention as the world's second largest economy,
before 1994 China implemented a fixed exchange rate system and a dual price
system. Switched to managed floating rate in 1994. Since then the Chinese
currency has been the US. Dollar is pegged. before 1997. The RMB remained
stable but appreciated. In 1998, due to the Asian financial crisis, the Chinese
government limited the arrival of the RMB to floats to avoid the crisis. After the
Asian financial crisis, the Chinese economy entered a booming era. Just before
2005, there was a surplus in both the current account and the capital account
which leads to imbalanced international payments. At the end of 2005, China's
foreign exchange reserves stood at US$11 billion. on July 2005. China announced
that China is now the U.S. The dollar will no longer remain par, but has switched
to a managed floating exchange rate regime based on market supply and demand
in terms of a basket of currencies. Before the reform of the RMB exchange rate,
the exchange rate between the RMB and the USD was around 8.2765. RMB to
USD has reached 6.0408. But after the point, it began to depreciate again,
especially since 2013 to the last half of 2015, GDP growth was about 7%, and the
sudden change in the exchange rate attracted a lot of attention. In late 2015, the
IMF announced that the RMB is part of the SDR (Special Drawing Right). The SDR
is an international reserve asset. As of March 2016, SDR 204.1 billion (equivalent
to approximately $285 billion) was created and allocated to members. SDRs can
be exchanged for freely usable currencies. The value of SDR is based on one
basket.
In this paper, we study the literature related to exchange rate, GDP and the effect
of exchange rate on GDP. We define the concept of GDP, exchange rate and how
to calculate. From the literature we feel that it is pertinent to study how changes
in the exchange rate affect GDP through two channels: one is exports and
imports, the other is foreign direct investment. We analyze theoretically how the
exchange rate will affect GDP. Next, we introduce how the Chinese exchange rate
changed which is unique in the whole world. It is also of great importance to
ascertain the current status of China's macro economy, including gross domestic
product (GDP), import and export trade and foreign direct investment (FDI). We
then study the transformations of the effect of the RMB real effective exchange
on Chinese GDP, imports, exports and foreign direct investment from the Sahaj
model. We used data from the first quarter of 1994 to the last quarter of 2016, to
study the relationship between the RMB real effective exchange rate and GDP,
imports, export trade and foreign direct investment in China, respectively. And
get some conclusion form can help the authority.
1.1 Contextual Background
However, even through china has one of the fastest , the exchange
rate affect in Gross domestic product not only gross domestic product
but also a GNP, GDP, and the china the exchange rate of china affect
in china low cost of exports of machinery, equipment and consumer
products. Slowdown China affect exchange rate in GDP. Since 2010
china has slowed from a 10.6% growth rate 6.1% exchange rate
affect in GDP. China economic focus from being export driven to
greater domestic consumption. Exchange rate affect in GDP exported
$106 billion in goods to china in 2019. In currently research china’s
exchange rate affects its foreign supply and demand. When they can
research the expected result that exports would decrease with
effective exchange rate. Chinese imports actually react to exchange
rate fluctuation in an unexpected method. Imports merely decrease
when the currency appreciates. As we shall look by investigate
bilateral imports equaitons for china main trading partners, this is
explained by china’s key role as importer of parts and components
form other countries. In true, a fall in china’s exports due to exchange
rate affect in GDP appreciation also implies a decrease in china’s
imports of investment products of parts and components for the
exporting sector. Furthermore we cannot find evidence that countries
 could affect this negative impact of renminbi appreciation on there
exports by rising exports to other countries. This implies that china
decision regarding its exchange rate have majot impacts on the GDP.

1.2 China background

China is the developed country, china use technology system. China
literacy rate 82%, china population 1997 1.22 billion and population
growth rate (1997 0.93). Workforce (699 million). Agriculture and
China government of communist party-led state. Constitution,
December 4, 1982. China economy GDP (1997 $890 billion
exchange rate based) per capita GDP (1997 $700 exchange rate
based GDP real growth rate: 8.8%.
Natural resources: coal, iron ore, crude oil, mercury, tin, tungsten,
antimony, manganese, molybdenum, vanadium, magnetite,
aluminum, lead, zinc, uranium, hydropower, potential, china
agriculture system (world’s largest producers of rice, sorghum,
potatos, peanuts, tea, millet, barley, commercial crops include,
cotton, other fibers, and oilseeds, produces variety of livestock goods.
Industry type, iron, steel, coal, machinery, light industrial goods,
armaments, petroleum.
China trade system: exports, $182.7 billion: mainly textiles,
garments, chemicals, footwear, minerals. The main partners of china
exporter, japan, U.S, south Korea, Germany, Singapore and
Netherlands.
China import system: the china imports: $124.36 billion. The china
industrial machinery, electrical equipment, chemicals, textiles, steel.
The china main partners of imports, japan, Taiwan, U,S, South Korea,
Germany and Russia
Several studies have recently estimated factors behind
 China’s foreign supply and demand. According to this paper, Chinese
exports have been driven to a long extent by rising demand, in
particular since Chinese exports are price elastic an appreciation of
renminbi implies a drop in china’s exports.
When showing at the imports more near, one notice that it is mainly
imports from other countries that fall when the renminbi appreciates
in true, a currency appreciation that causes a fall in the export
sector’s competitiveness also implies a decline in demand for
investment products. Imported parts, and components for that sector.
This result also has a strong implication worth noting, namely that
china’s export goods are becoming more of a complement to the
production of goods in other countries than a substitute.
1.3 Research problem
Research of china exchange rate affect in gross domestic product,
comes only way to knowledge about the gross exchange rate affect in
gross domestic of china. The effective of different areas of china in
affect on gross domestic product. The china large developed country
gross domestic product. However china imports and exports different
countries. China economy valued at market exchange rate, the share
of china GDP in the across the country economy is the high when
purchasing power adjusted in gross domestic product. This is due to
difference between import and export traded and goods that lead to
aan understatement of the real incomes of most developing counties
and an exchange rate widely the increasing weight of china and the
other emerging countries in the world economy.
this research investigate areas, the purpose of the research is to look
upon the exiting exchange rate, affect gross domestic product,
strength, weakness, and point out of potential improvements of the
exchange rate affect in gross domestic product.
This study aims to increase the awareness of china at all the levels
about economy exchange rate of affect in gross domestic product.
Particular there per capita income of china gross domestic product.
And knowledge of gross domestic product.
Finally the aim of the research paper is to make recommendation for
the china on how to improve the exchange rate affect in gross
domestic product.
1.4 Aim and objectives:
The main goal of the study is to investigate and understand the affect
on exchange rate china affect in gross domestic product. The
objectives of this research are:
To identify the most important most exchange rate of china
To evaluate the affect in gross domestic product.