Reforming State Owned Enterprises in China: Effects of WTO Accession

Claustre Bajona and Tianshu Chu

Review of Economic Dynamics, 2010, vol. 13, issue 4, 800-823

Abstract: In December 2001 China became a member of the World Trade Organization (WTO). By signing the accession protocol China not only agreed to reform its trade policy but it also accepted regulations that imply reductions on government subsidies to the state-owned sector. In this paper we claim that the latter, largely ignored in the literature, generate important welfare gains that need to be attributed to WTO accession. We develop a dynamic general equilibrium model with state and private enterprises. We calibrate the model to the Chinese economy and we quantitatively assess the economic effects of reducing subsidies to the state sector as required by the WTO. We find the welfare benefits of such reduction in subsidies to be substantial. Using the context of China, this paper identifies a new channel through which WTO accession increases a country's welfare: it induces reforms on domestic subsidies which lead to an increase in economic efficiency. (Copyright: Elsevier)

Keywords: State-owned enterprises; WTO accession; China; Government subsidies to industry (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2009.07.003
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.

Related works:
Software Item: Code and data files for "Reforming SOE in china: the role of WTO accession" (2011)
Working Paper: Data Appendix to "Reforming the State-Owned Enterprises in China: Effects of WTO Accession" (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:issued:06-12

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2009.07.003

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().