Agriculture Reference
In-Depth Information
for those wth regulated foregn exchange regmes. Chna s the largest
developing economy to maintain, at least
de facto
, fixed US dollar parity
and, in this respect, the macroeconomic policy regimes of Hong Kong and
Tawan have been compatble wth that of the manland.
Turning to primary factors, skill is separated from raw labour on
occupational grounds, with the 'professional' categories of the International
Labour Organization (ILO) classification included as skilled.
15
The structure
of factor demand has skll and physcal captal as complements. Ths enables
the model to represent the links between skill availability, capital returns
and investment that are important in China, which has large skilled and
unsklled labour forces that are ncreasngly moble between sectors.
16
Finally, the sectoral breakdown we have chosen aggregates the 57 sectors
in the database to our more manageable 14, offering the most detail
in agricultural and marine products. This is because, amongst China's
merchandise trade commitments for WTO accession, a key liberalisation is
in the processed food sector, to which these commodities are inputs.
Because the length of run is short, the real part of the short-run model
ncorporates smaller-than-standard elastctes of substtuton n both
demand and supply. These are based on a short-run calbraton exercse
on the Asian crisis, described in Yang and Tyers (2000). For further details
of the model, its parameters and its structure, see Yang and Tyers (2000)
and Tyers and Yang (2000, 2001).
China's trade policies and reforms
The 2001 pattern of trade and producton taxes and subsdes s constructed
first from the GTAP Version V global database for 1997. Recent updates
to the tariff regime are incorporated, as provided by Ianchovichina and
Martin (2001). Of particular importance is the introduction since 1997 of
duty drawbacks that are offered to exporting firms on the component of
ther mports of ntermedate goods that s used for export producton.
The effects of these duty drawbacks are particularly difficult to quantify
snce t s generally mpossble to separate out producton for export from
producton for the domestc market.
17
For the analysis, the effects of duty drawbacks were approximated by,
first, constructing a database comprising inter-industry financial flows after
