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Chinese accession to the WTO: Economic implications for China, other Asian and North American economies

  • Ghosh, Madanmohan
  • Rao, Someshwar

This paper, using a dynamic, multi-sector and multi-country Computable General Equilibrium (CGE) model, analyses the combined economic impact of China's accession to the World Trade Organization (WTO) and the removal of tariff and non-tariff barriers on textiles and apparel by the industrialized countries in China and North America and other major economies. The combined impacts of these two policy initiatives are studied in detail on trade flows, real output, employment and investment both at the aggregate and industry levels in China, the U.S., Canada and other countries/regions. The simulation results suggest that China's real gross domestic product (GDP) would increase by over 2 percent, mainly due to a large increase in the output of textiles and apparel industries. India too would gain considerably in these two industries from the removal of the trade barriers. Textiles and apparel industries will face considerable adjustment challenges in North America particularly in the U.S. and Canada, implying output and employment losses ranging between 20 and 30 percent. However, the output and employment gains in other North American industries will be more than offset the losses in textiles and apparel industries. Bilateral trade between China and North American economies would increase between 15 and 20 percent, but over all economic gain would be modest. Asian economies will also experience significant increase in trade with China and the output impacts are positive but modest.

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File URL: http://www.sciencedirect.com/science/article/B6V82-4YK7HXD-1/2/3bc69b9318812fcb90925a66e9355995
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Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 32 (2010)
Issue (Month): 3 (May)
Pages: 389-398

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Handle: RePEc:eee:jpolmo:v:32:y::i:3:p:389-398
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505735

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  1. Ianchovichina, Elena, 2004. "Trade policy analysis in the presence of duty drawbacks," Journal of Policy Modeling, Elsevier, vol. 26(3), pages 353-371, April.
  2. Hong Zhang, 2004. "The impact of China's accession to the WTO on its economy: an imperfect competitive CGE analysis," International Economic Journal, Taylor & Francis Journals, vol. 18(1), pages 119-137.
  3. Ianchovichina, Elena & Martin, Will, 2001. "Trade liberalization in China's accession to the World Trade Organization," Policy Research Working Paper Series 2623, The World Bank.
  4. Ghosh, Madanmohan & Rao, Someshwar, 2005. "A Canada-U.S. customs union: Potential economic impacts in NAFTA countries," Journal of Policy Modeling, Elsevier, vol. 27(7), pages 805-827, October.
  5. Wang, Zhi, 2003. "The impact of China's WTO accession on patterns of world trade," Journal of Policy Modeling, Elsevier, vol. 25(1), pages 1-41, January.
  6. Ianchovichina, Elena & Martin, William, 2003. "Economic impacts of China's accession to the World Trade Organization," Policy Research Working Paper Series 3053, The World Bank.
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