Empirical research on the influence of real exchange rate volatility on US FDI in China

This paper carries on an empirical research on the influence of real exchange rate of RMB´s volatility on US FDI in China, adopting GARCH model, the VAR model and cointegration theory, based on quarterly data from 1994 to 2009. The result demonstrated that there is a stable relationship among the volatility of real exchange rate, real exchange of RMB and US foreign direct investment in China. The appreciation of RMB and the increase in volatility of exchange rate significantly hindered the US foreign direct investment in China.