Skip to main content Accessibility help
×
Hostname: page-component-77c89778f8-m42fx Total loading time: 0 Render date: 2024-07-17T13:49:09.067Z Has data issue: false hasContentIssue false

8 - Assessing the Impact of China's WTO Accession on Investment

Published online by Cambridge University Press:  05 June 2012

Terrie L. Walmsley
Affiliation:
Purdue University, USA, and University of Melbourne, Australia, Australia
Thomas W. Hertel
Affiliation:
Purdue University, USA
Elena I. Ianchovichina
Affiliation:
The World Bank, USA
Elena Ianchovichina
Affiliation:
The World Bank, Washington, DC
Terrie L. Walmsley
Affiliation:
Purdue University, Indiana
Get access

Summary

Introduction

During the 1980s and 1990s, China carried out significant reforms to restructure and open up its economy to foreign trade. These reforms helped spur a period of rapid growth, with annual growth in real per capita GDP averaging 6.04% over the period 1978–95 (Maddison 1998). However, reforms to the legislative framework governing foreign investment in China have proceeded more slowly. Entry into certain sectors, as well as the share of foreign ownership, is significantly limited, and joint ventures typically remain the best option for foreign investors. In an effort to boost foreign investment, the Chinese government began offering a number of special incentives in the early 1990s, including duty drawbacks on imported intermediate inputs and capital goods used for the production of exports, exemptions and reductions in the rate of income taxes paid on profits,1 and preferential tax rates for foreign enterprises that reinvest their profits (China Council 2000). These incentives paid off, with foreign investment increasing sharply in 1992–3 (Fig. 8.1). Indeed, by 1994 China accounted for approximately 20% of all foreign direct investment (FDI) in developing countries (Garbaccio 1995).

However, by 1996 the rate of growth in FDI had begun to slow (Fig. 8.1). A survey of the Chinese economy by The Economist (2000) explored some of the reasons behind the FDI slowdown in China. In many cases investors' high hopes for this market were slow to materialize, with the absence of a rules-based economy making it difficult for outsiders to operate effectively in China.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, K., J., Francois, T. W., Hertel, B., Hoekman, and W., Martin. 2000. Potential Gains from Trade Reformin the New Millennium. Paper presented at the Third Annual Conference on Global Economic Analysis, June 27–30, Monash University, Australia.Google Scholar
Ahuja, V. and D., Filmer. 1995, July. Educational Attainment in Developing Countries; New Estimates and projections Disaggregated by Gender. World Bank Policy Research Working Paper 1489. Washington, DC: World Bank.Google Scholar
Baldwin, R. E., J. F., Francois, and R., Portes. 1997. “The Costs and Benefits of Eastern Enlargement: The Impact on the EU and Central Europe”. Economic Policy (April), 127–76.Google Scholar
China Council. 2000. China Business Guide. Beijing: China Council for the Promotion of International TradeChina Chamber of International Commerce. China's Statistical Yearbook. 2002. Beijing: China Statistics Press.
Claro, S. 2001. Tariff and FDI Liberalization: What to Expect from China's Entry into the WTO ? Paper presented at the Eighth Annual Conference on Empirical Investigations in International Trade, November 9–11, Purdue University, West Lafayette, IN.Google Scholar
CPB. 1999, December. World Scan: The Core Version. The Hague: CPB Netherlands Bureau for Economic Policy Analysis. The Economist. 2000. “A Survey of China: Now Comes the Hard Part,” April 8–14.
Dixon, P. B. and M. T., Rimmer, 2002. Dynamic General Equilibrium Modelling for Forecasting and Policy: A Practical Guide and Documentation of MONASH. Amsterdam: North-Holland Publishing Company.Google Scholar
Francois, J. and D., Spinanger. 2002. Regulated Efficiency, WTO Accession and the Motor Vehicle Sector in China. Paper prepared for the conference WTO Accession, Policy Reform and Poverty Reduction, June 28–29, Beijing.Google Scholar
Francois, J. and A., Strutt. 1999, June. “Post Uruguay Round Tariff Vectors for GTAP v.4”. Unpublished memorandum.Google Scholar
Garbaccio, R. F. 1995. US-China Trade Relations: 1972–95. Paper prepared for the 4th International Symposium on Societies and Economy in East Asia, Oct. 2–3, Osaka, Japan.Google Scholar
Gilbert, J. and T., Wahl. 2001. “Applied General Equilibrium Assessments of Trade Liberalization in China”. World Economy 25 (5): 697–731.CrossRefGoogle Scholar
Harrison, G. W., T. F., Rutherford, and D. G., Tarr. 1996. “Quantifying the Uruguay Round”. In W., Martin and A., Winters (eds.), The Uruguay Round and the Developing Economies (pp. 216–52). Cambridge: Cambridge University PressGoogle Scholar
Hertel, T. W. (ed.). 1997. Global Trade Analysis:Modeling and Applications. Cambridge: Cambridge University Press.
Hertel, T. W. and K., Huff. 2001. Decomposing Welfare Changes in GTAP. GTAP Technical Paper No. 5 (rev. version). West Lafayette, IN: Center for Global Trade Analysis, Purdue University.Google Scholar
Hertel, T. W., W., Martin, K., Yanagishima, and B., Dimaranan. 1996. “Liberalizing Manufactures Trade in a Changing World Economy”. In W., Martin and A., Winters (eds.), The Uruguay Round and the Developing Economies (pp. 183–215). Cambridge: Cambridge University Press.Google Scholar
Huang, Y. 2002. Selling China: Foreign Direct Investment during the Reform Era. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Ianchovichina, E. I. 2003. GTAP-DD: AModel for Analyzing Trade Reforms in the Presence of Duty Drawbacks / GTAP Technical Paper No. 21. West Lafayette, IN: Center for Global Trade Analysis, Purdue University.Google Scholar
Ianchovichina, E. I. and W., Martin. 2001. “Trade Liberalization in China's Accession to WTO”. Journal of Economic Integration 16 (4), 421–44.CrossRefGoogle Scholar
Ianchovichina, E. I. and W., Martin. 2003. Economic Impacts of China's Accession to the WTO. Policy Research Working Paper 3053. Washington, DC:World Bank.CrossRefGoogle Scholar
Ianchovichina, E. I. and T. L., Walmsley. 2003. Impact of China's WTO Accession on East Asia. Policy Research Working Paper 3109. Washington, DC:World Bank.CrossRefGoogle Scholar
Lejour, A. 2000. China and the WTO: The Impact on China and the World Economy. Paper presented at the Third Annual Conference on Global Trade Analysis, June 27–30, Melbourne, Australia.Google Scholar
Maddison, A. 1998. Chinese Economic Performance in the Long Run. Paris: Development Centre Studies, OECD.CrossRefGoogle Scholar
Mai, Y., M., Horridge, and F., Perkins. 2003. Estimating the Effects of China's Accession to the World Trade Organisation. Co PS General Paper No. G-137. Paper presented at the Sixth Annual Conference on Global Trade Analysis, June 12–14, Scheveningen, The Hague.Google Scholar
Martin, W., B., Dimaranan, T., Hertel, and E., Ianchovichina. 2000. Trade Policy, Structural Change and China's Trade Growth. Working Paper No. 64. Stanford: Institute for Economic Policy Research.Google Scholar
Mattoo, A. 2001. China's Accession to the WTO: The Services Dimension. Paper presented at the Workshop on WTOAccession, Policy Reform, and Poverty Reduction, October, Beijing.Google Scholar
McDougall, R. A., A., Elbehri, and T. P., Troung (eds.). 1998. Global Trade, Assistance and Protection: The GTAP 4 Data Base. West Lafayette, IN: Center for Global Trade Analysis, Purdue University.Google Scholar
McKibbon, W. J., and K. K., Tang. 2000. “Trade and Financial Reform in China: Impacts on the World Economy”. World Economy 23 (8), 979–1003.CrossRefGoogle Scholar
Pangestu, M. and D., Mrongowius. 2001. Facing the Challenge of WTO Accession: Development and Reform of China's Telecommunications Services Sector. Paper presented at the Workshop on WTO Accession, Policy Reform, and Poverty Reduction, October, Beijing.Google Scholar
Spinanger, D. 1999. “Textiles beyond the MFA Phase-Out”. World Economy, 22 (4), 455–76.CrossRefGoogle Scholar
Walmsley, T. L. and T. W., Hertel. 2001. “China's Accession to the WTO: Timing is Everything”. World Economy 24 (8), 1019–49.CrossRefGoogle Scholar
Wang, Z. 1997a. “China and Taiwan, China Access to the World Trade Organization: Implications for U.S. Agriculture and Trade”. Agricultural Economics, 17, 239–64.CrossRefGoogle Scholar
Wang, Z. 1997b. Impact of China's WTO Accession on the Labor Intensive Exports and Implications for U.S. Agricultural Trade – A Recursive Dynamic CGE Analysis. Paper presented at the 1997 AAEA Meeting, July 28–31, Toronto.Google Scholar
Wang, Z. 2001. The Impact of China's WTO Accession on Patterns of World Trade. Paper prepared for the International Agricultural Trade Research Consortium, May 18–20.Google Scholar
Wang, Z. 2002. WTO Accession, “Greater China” Free Trade Area and Economic Relations across the Taiwan Strait. Paper presented at the Fifth Conference on Global Economic Analysis, June 5–7, Taipei.Google Scholar
Wenping, L. and C., Findlay. 2001. Logistics in China: Accession to the WTO and Its Implications. Paper presented at the Workshop on WTO Accession, Policy Reform, and Poverty Reduction, October, Beijing.Google Scholar
Yang, Y. 1996. “China's WTO Membership: What's at Stake?World Economy 19 (6), 661–82.CrossRefGoogle Scholar

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×