Growing up in Guangdong, a prosperous southern province with China's largest export industry, I witnessed the economic boom since the 1990s, characterized by the growth of a labor-intensive manufacturing economy. labor and a significant influx of workers. migrant workers from neighboring provinces. But rising wages, combined with soaring energy and materials costs, have wiped out much of the gross profit of these low-end factories in recent years. More importantly, the appreciation of the RMB became the final straw: thousands of factories were forced to leave this Pearl River Delta. However, across the Pacific Ocean, the US government and Congress have continued to attack China's manipulation of its currency to make its exports to the US cheaper and US exports cheaper. much more expensive. Many politicians blame the exchange rate for the huge U.S. trade deficit with China and argue that it is artificially undervalued against the dollar, by as much as 40 percent. Putting the political debate aside, is the RMB really undervalued? Or is it undervalued as much as our empirical experience tells us? And is the exchange rate enough to reduce China's trade surplus? As the chart shows, from 2005 to 2008, the bilateral trade deficit increases as the RMB strengthens significantly, while the RMB exchange rate remains stable, the trade deficit decreases from 2008 to 2009. This is a counterexample. for the appreciation solution to the trade deficit problem. Further study is still needed. In the following article, I will explore the effect of exchange rates on trade flows between China and the United States by analyzing data from recent years using the Cheung model (using the elasticity of price), as well as incorporating other factors (consumption..... middle of document ......t on overall trade flows is relatively low and sometimes goes in the opposite direction to that expected. These Results suggest that exchange rate policy alone will not be enough to reduce China's trade surplus, omitting the effect of consumption and the close link between certain imports and exports on trade flows warrants further examination. in later works.ReferencesAmiti, M., Caroline, F. (2008).Cheung, Y., Chinn, MD, Fujiji, E. (2007). -22.Cheung, Y., Chinn, MD, Fujiji, E. (2008) and Exchange rates, 1-28. What is special about Chinese exports?, 23-24. Schott, P. K. (2006). The relative sophistication of Chinese exports, 1-2. China's exchange rates and trade flows 4