Greater China's Accession to the WTO: Implications for International Trade/Production and for Hong Kong

Joseph Francois and Dean Spinanger

No 331044, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The impact of the accession of China (PRC) and Chinese Taipei to the WTO in 2001 is estimated in this paper to be substantatial. Using a CGE model (GTAP Version 5) with 23 sectors and 25 regions China’s (PRC) GDP is foreseen as increasing by almost 6%, while Hong Kong gains and Chinese Taipei loses marginally. All three economies register noticeable export increases. China’s (PRC) growth is driven by a massive surge in textile and clothing production, while the automobile industry and other heavy industries will face severe restructuring problems. Focusing in on textiles and clothing trade around the world it becomes very obvious that China (PRC) will be a magnet for production, whereas economies that have profited from preferential access to certain markets (US and EU) will suffer greatly once quotas are removed by 2005. Hong Kong thereby can still profit from its role as a sourcing hub. If trade between the economies of Greater China is freed of all barriers the synergies and more efficient links would definitely enhance the growth potential, from which Taipei is bound to profit considerably. For Hong Kong the accession opens up a huge potential, but more than in the past it will have to compete with other WTO members to tap it.

Keywords: International Relations/Trade; Production Economics (search for similar items in EconPapers)
Pages: 30
Date: 2002
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