A Study Of Rmb Clearing's Welfare Effect In Russia-china Border Trade

The outbreak of the financial crisis made all countries realized that it was imperative to reform the international monetary system. China's rapid economic development let more and more neighboring countries accept RMB, and the RMB continuously evolves to be a regional and international currency. Spurred by China's RMB market reform strategy, RMB is expected to become one of the important reserve currencies in the monetary system. In accordance with the demand of this development, China tried to use RMB as clearing currency in some cities. This indicates that RMB has formally begun its long journey of regionalization.In response to the financial crisis, China and Russia should cooperate to confront the U.S. dollar clearing and the negative impact of financial crisis and improve the structure of U.S. dollar-based international monetary system. Because the Russia-China border trade plays an important role in China's border trade, it has strong instruction meaning to research the issue of RMB clearing in Sino-Russian border trade for the study of RMB regionalization. From the perspective of China's trading partner that is Russia, this paper will investigate the practical effect of taking RMB as clearing currency on China's trading partners through analyzing Russia-China border trade's welfare change. The basic purpose is to find out the reason of why RMB is not yet open to the implementation of clearing currency on Russia-China border trade, besides this paper will give some police advises to advance the development of Russia-China's bilateral border trade and accelerate the pace of RMB'regionalization. This paper will develop a three countries'trade model to analyze each country's welfare change of the two group economy that is the Monetary Union between Russia and China (in RMB) and the Monetary Union between Russia and the United States (in U.S. dollars), besides I will use numerical simulation to make the benefits brought about by the Monetary Union visualization. In comparing the benefits of different cases, this paper find that the Russian should make a comprehensive comparison according to the transaction cost of trade and each country's production technology level to decide which currency will be used for trade clearing. Relative to China's geographic advantages, the United States also has extremely attractive technological advantages for Russia, so I hold that in order to increase RMB's international pricing rights in foreign trade we must insist on the basic strategy of developing economy and enhancing production technology level.