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

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  • Ghosh, Madanmohan
  • Rao, Someshwar

Abstract

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.

Suggested Citation

  • Ghosh, Madanmohan & Rao, Someshwar, 2010. "Chinese accession to the WTO: Economic implications for China, other Asian and North American economies," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 389-398, May.
  • Handle: RePEc:eee:jpolmo:v:32:y::i:3:p:389-398
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    References listed on IDEAS

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    1. Ianchovichina, Elena, 2002. "Trade policy analysis in the presence of duty drawbacks," Policy Research Working Paper Series 3312, The World Bank.
    2. Elena Ianchovichina & Will Martin, 2004. "Impacts of China's Accession to the World Trade Organization," The World Bank Economic Review, World Bank, vol. 18(1), pages 3-27.
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    6. Ianchovichina, Elena, 2004. "Trade policy analysis in the presence of duty drawbacks," Journal of Policy Modeling, Elsevier, vol. 26(3), pages 353-371, April.
    7. 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.
    8. 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.
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    Cited by:

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    3. Inga Heiland, 2017. "Five Essays on International Trade, Factor Flows and the Gains from Globalization," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 74.
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    6. Jing Zhang, 2013. "Global Welfare Impact of China: Trade Integration and Technology Change," 2013 Meeting Papers 630, Society for Economic Dynamics.
    7. Larry D. Qiu & Chaoqun Zhan, 2016. "Special Section: China's Growing Trade and its Role to the World Economy," Pacific Economic Review, Wiley Blackwell, vol. 21(1), pages 45-71, February.
    8. Amandine Aubry, 2022. "Trade, access to varieties, and patterns of consumption," Review of International Economics, Wiley Blackwell, vol. 30(2), pages 369-400, May.
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    10. Duan, Yuqi, 2021. "What is The Impact of Chinas Entry into the WTO on CO2 Emissions?," Warwick-Monash Economics Student Papers 26, Warwick Monash Economics Student Papers.
    11. Bond, Eric W. & Duan, Yuwan & Ji, Ting & Lu, Yi, 2023. "Trade and welfare effects of export tax: Theory and evidence from China's incomplete export VAT rebate," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 542-560.
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