Empirical Analysis of RMB Real Exchange Rate Volatility Effect on International Trade between China and Japan

The existing research did not give a consistency conclusion whether RMB exchange volitility has a significant effect on China's import and export trade or not. Based on the import and export demand equations, this paper establish the import and export demand cointegration models to study sino-japanese trade decision factors. Research found that RMB exchange volitility had no significant influence on the import and export trade, the two countries' respective domestic income has the biggest positive significant influence on bilateral trade. The RMB exchange rate against the yen and the brokeout of financial crisis has significantly positive effects on export to China, but both had no significant effect on China's imports. Then the paper analyzes the reasons behind the results and puts forward relevant policy suggestions.