Under the background of Renminbi (RMB) appreciation, where will China's textile trade go? Analysis based on the Marshall-Lerner condition and the J-curve effect

This paper examines how RMB appreciation affects China’s textile trade. The autoregressive distributed lag-error correction model (ARDL-ECM) is applied with monthly data from August 2005 to June 2024 to explore whether the impact of RMB appreciation on China’s textile trade meets the Marshall–Lerner condition (ML condition) and the J-curve effect. The results show that China’s textile trade fails to meet the ML condition and the J-curve effect. In the short term, RMB appreciation may cause trade balance fluctuations. However, in the long term, RMB appreciation benefits China’s textile trade development. This paper also proposes a series of policy recommendations to cope with the challenges brought by RMB appreciation and supports the sustainable development of the textile industry.