Exchange rate expectations and exports : Firm‐level evidence from China

Xiaohua BAO, Hailiang HUANG, Larry D. QIU*, Xiaozhuo WANG

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

1 Citation (Scopus)


The notion that the exchange rate affects exports is well understood. However, whether exporters respond to the expectations of the exchange rate is unknown. Hence, in this study, we construct a measure of exchange rate expectations based on news articles from the Factiva database. We use machine learning to identify and classify news articles about the appreciation of the renminbi (RMB, Chinese currency). Our empirical estimation shows that from 2000 to 2006, Chinese firms reduced their exports in response to a higher expectation of RMB appreciation. They switched their sales from export to domestic markets. The responses are larger in low-productivity firms, state-owned enterprises, processing trade, and final goods trade.
Original languageEnglish
Pages (from-to)635-661
Number of pages27
JournalReview of International Economics
Issue number2
Early online date21 Sept 2023
Publication statusPublished - May 2024

Bibliographical note

Funding Information:
We thank the referee for very helpful comments and suggestions. We also thank Yuqing Tang for her excellent research assistance. We acknowledge the financial support from the Social Science Foundation of China (18ZDA069, 20CJY046), the Shanghai Municipal Education Commission (2019‐01‐07‐00‐07‐E00031) and Humanlity and Social Science Foudation of China (17YJA630029).

Publisher Copyright:
© 2023 John Wiley & Sons Ltd.


  • exchange rate expectation
  • exports
  • RMB appreciation

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