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China´S Wto Accession: Its Impact On Chinese Employment

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  • A.S. Bhalla
  • S. Qiu
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    Abstract

    It is often claimed that the WTO membership will benefit China by increasing exports and employment and forcing domestic firms to improve efficiency through competition. Benefits are expected to accrue through improved resource allocation and greater economic efficiency resulting from trade liberalization and greater global competition. In the paper we argue that although some sectors will benefit from competition others will suffer a great deal especially in the short and medium terms. The net overall benefits are likely to accrue only in the long run. During the transition period China will face enormous problems of restructuring of state-owned enterprises (SOEs), and banking, insurance and financial services, entailing significant loss of employment. The employment impact of the accession with special reference to SOEs is considered since they are generally less competitive than the non-state enterprises. Reduction in SOE employment may not be compensated by an increase in employment in the non-state sector. The experience of three specific industries is discussed: textiles and clothing, automobiles and household appliances. Besides the unemployment impact of the accession, the paper examines the possibility of a ‘flying geese model’ of trade and development working within China to maintain its global competitiveness on account of low labour costs in the hinterland. It also discusses China’s possible response to global competition to protect employment, for example. Three types of response are considered: non-compliance of the WTO accord, devaluation, and a production shift from tradeables to non-tradeables.

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    File URL: http://www.unctad.org/en/docs/osgdp163_en.pdf
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    Bibliographic Info

    Paper provided by United Nations Conference on Trade and Development in its series UNCTAD Discussion Papers with number 163.

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    Date of creation: 2003
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    Handle: RePEc:unc:dispap:163

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    1. Stephen Nickell & D Nicolitsas, 1994. "Wages," CEP Discussion Papers dp0219, Centre for Economic Performance, LSE.
    2. Daniel H. Rosen, 1999. "China and the World Trade Organization: An Economic Balance Sheet," Policy Briefs PB99-06, Peterson Institute for International Economics.
    3. Paul Krugman & Robert Lawrence, 1993. "Trade, Jobs, and Wages," NBER Working Papers 4478, National Bureau of Economic Research, Inc.
    4. S.M. Shafaeddin, 2002. "The Impact Of China´S Accession To Wto On The Exports Of Developing Countries," UNCTAD Discussion Papers 160, United Nations Conference on Trade and Development.
    5. Mazumdar, Dipak, 1993. "Labor Markets and Adjustment in Open Asian Economies: The Republic of Korea and Malaysia," World Bank Economic Review, World Bank Group, vol. 7(3), pages 349-80, September.
    6. Ianchovichina, Elena, 2001. "Trade Liberalization in China’s Accession to WTO," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 421-445.
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