The impact of WTO reform on china’s economy: some numerical simulation results

Abstract

Using a global general equilibrium numerical model system with endogenous trade imbalance, this paper simulates the potential economic impacts of different WTO reform scenarios on China. The simulation results show that ending China’s ‘special and differential treatment’ (SDT) alone would have a negative impact on China’s social welfare and GDP, but the impact on manufacturing employment and foreign trade would be positive. The results of a simultaneous withdrawal of SDT from China, Brazil, India, and South Africa would be in line with the effect of China’s separate exit, but China’s damage would be lessened. If all developing countries were to withdraw from SDT, China’s losses would be further reduced. If the WTO reform goals were to promote and achieve a new round of global trade liberalisation, China’s welfare, output, manufacturing employment, and foreign trade would all improve significantly.