earticle

영어

This study is to examine countermeasures to the possibility of the abrupt change in Chinese Rinminbi through analyzing the effect of the real effective exchange rates in Chinese Rinminbi on the export and import prices in trade between China and Korea. The export and import prices are calculated by the value of exports and imports divided by the quantity. The SITC are categorized by 10 sections to analyze the prices items by items. Since SITC 9 section is not available, this study use the sections from SITC 0 to SITC 8. The Chinese Rinminbi nominal and real effective exchange rates are used by explanatory variables. The data are covered the periods from the first quarter of 1994 to the first quarter of 2010. The empirical results in all cases except SITC 1, the adjustment is occurred by nominal and real effective exchanger rates, in which all signs of direction are positive. This implies in the fixed Chinese Rinminbi exchange rate system that the deviations from long-run equilibrium lead to completely increase the consumer price index. This study show that machinery, steel and petrochemistry over 30% in exports to China have the price competitive advantage due to the appreciation in Chinese Rinminbi, but they may also have negative impacts from the abrupt changes in Chinese economy.