A Study On The Impact Of The RMB RER Volatility On The Import And Export Trade Between P.R. China And Russian Federation, Belarus And Kazakhstan

Russia is not only the fourth largest trading partner of China, but China’s thirdlargest oil importing countries. Furthermore, China is the largest trading partner ofKazakhstan, meanwhile, Kazakhstan is also China’s largest investment destination inthe CIS. The increasing economic and trade cooperation demands between China andKazakhstan will herald the Kazakhstan will occupy an important strategic position inour import and export trade.Russia, Belarus and Kazakhstan has rich oil and gas resources, Russia is one ofthe largest oil and gas exporting country in the world. On January1,2010, Russia,Belarus and Kazakhstan announced the establishment of the customs union. Theestablishment of the customs union will provide a broader market for its trading partners.In this paper, we show the analysis and empirical study of the impact of RMB realexchange rate and its volatility on the import and export trade between China andRussia, Belarus and Kazakhstan. The empirical results show that the depreciation of theRMB real exchange rate has a catalytic role in the import and export trade betweenChina and Russia, Belarus and Kazakhstan, the real exchange rate volatility to someextent will promote the export trade from China to Russia, Belarus and Kazakhstan.China’s import trade with Russia, Belarus and Kazakhstan is more sensitive to exchangerate volatility. The impact of the RMB exchange rate changes on our import trade withRussia, Belarus and Kazakhstan is greater than the impact of GDP on both the importtrade and the export trade. In the end of the paper, we discuss the causes of the empiricalresults and put forward some relevant policy recommendations based on the empiricalresults.