The article examines how changes in China's currency exchange rate affect its trade balance. It reviews existing research on this topic and analyzes how exchange rate fluctuations impact imports and exports. By studying data from 1994 to 2010, the researchers found that changes in the RMB exchange rate do not have a significant effect on China's trade balance. They suggest that China should boost domestic demand to reduce trade surplus, control the growth of the trade balance to ease pressure from RMB appreciation, and maintain a stable exchange rate.