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From 0 to 60 without a Hitch? Regulated Efficiency, WTO Accession, and the Motor Vehicle Sector in China

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  • Francois, Joseph F.
  • Spinanger, Dean

Abstract

With China's automobile market rapidly expanding into the fourth largest in the world, the question arises about how it will come to grips with the massive restructuring problems it is facing. This paper is concerned with the interaction of regulated efficiency and WTO accession, and its impact on China’s motor vehicle sector. The approach is general equilibrium using GTAP5 aggregated to 23 sectors and 25 regions. Regulatory reform and internal restructuring are seen as being critical to the impact on the sector. Such a restructuring is represented here by a cost reduction following from consolidation and rationalization. This involves movement of costs toward global norms. Without such restructuring, WTO accession would mean that imports of final vehicles would surge, though imports of parts could well fall as production moves offshore. However, with restructuring, it could be assumed that the final assembly industry can be made competitive by world standards. What hitches might be involved or rather how smooth will the ride be to 60mph? And will the ride get bumpy for other production locations?

Suggested Citation

  • Francois, Joseph F. & Spinanger, Dean, 2003. "From 0 to 60 without a Hitch? Regulated Efficiency, WTO Accession, and the Motor Vehicle Sector in China," Conference papers 331150, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331150
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    References listed on IDEAS

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