Abstract
This study explores the impact of bilateral exchange rate on the export and import between Shandong province of China and Japan under supply chains and vertical integration cooperative pattern from regional view. Based on the data over 1998–2017 periods, ADF test, Engle-Granger (EG) test and Granger Causality Test are employed. The results indicate that bilateral exchange rate (RMB/100Yen) is positive to the export trade from Shandong province to Japan, but there is no evidence bilateral exchange rate has effect on the import of Shandong province from Japan. The supply chains and vertical integration cooperative pattern are used to explain the result