Research on the impact of geopolitical instability on Sino-Russian trade

Abstract

Using the Multiple Linear Regression model, this paper examines the effects of geopolitical risks on the trade between Russia and China, from 2006 to 2022. For this purpose, the author uses the index of geopolitical risks (GPR index). To the best of my knowledge, this is the first paper in the literature that considers the GPR index in the analysis of the Sino-Russian mutual trade. According to the findings, an increase of 1% in global geopolitical risk cases decline of 9% in mutual trade between the countries. However, even though overall global geopolitical risk plays a negative role in trade development, both countries' geopolitical risks independently positively contribute to trade growth. The increase of 1% in the geopolitical risk of China and Russia causes an increase in international trade by 4,5 and 3% respectively. The research also provides suggestions for the associated challenges.