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The purpose of this study is to investigate the impact of exchange rate volatility between China and EU’s countries including the 10 new member countries, which joined EU in 2004 and to analyse the effects of the European economic and monetary integration on the trade between China and EU. For empirical analysis is used a gravity model concerning the exchange rate volatility on the bilateral trade. By the empirical tests, using annual data for the period from 1990 to 2006, it is detected that the exchange rate volatility made a significant negative impact on the China-EU trade. The departure of EURO and the circulation of the actual EURO have positive impacts on the trade between China and 15 states of EU, but not on the trade between China and 25 EU-members. The Exchange rate volatility is influenced more negatively on the trade between China and 25 EU’s states than on the trade between China and 15 EU’s states. Therefore, the EU should use strategically a management policy to control the exchange rate volatility in the short term for improvement of a trade imbalance on the Trade and fundamental strengthening of 10 East European members.


The purpose of this study is to investigate the impact of exchange rate volatility between China and EU’s countries including the 10 new member countries, which joined EU in 2004 and to analyse the effects of the European economic and monetary integration on the trade between China and EU. For empirical analysis is used a gravity model concerning the exchange rate volatility on the bilateral trade. By the empirical tests, using annual data for the period from 1990 to 2006, it is detected that the exchange rate volatility made a significant negative impact on the China-EU trade. The departure of EURO and the circulation of the actual EURO have positive impacts on the trade between China and 15 states of EU, but not on the trade between China and 25 EU-members. The Exchange rate volatility is influenced more negatively on the trade between China and 25 EU’s states than on the trade between China and 15 EU’s states. Therefore, the EU should use strategically a management policy to control the exchange rate volatility in the short term for improvement of a trade imbalance on the Trade and fundamental strengthening of 10 East European members.