Agriculture Reference
In-Depth Information
of urbansaton n the western regon has been low and the urban economy
in the western provinces has not experienced much restructuring, and is
therefore less market-oriented and less efficient.
Macroeconomic implications of WTO accession
Most other studies of China's WTO accession have focused on the medium
and long-run impacts of accession. There are, however, important short-
run issues, in particular those relating to the macroeconomic policy
envronment n whch the reforms take place. The study by Tyers and Rees
(see Chapter 9 and 2002) therefore examned the short-run mpacts of the
reforms under scenarios of capital controls, fixed and floating exchange
rate regimes and alternative fiscal policies.
An adaptaton of the GTAP model smlar to that used n Duncan et
al. (see Chapter 8) was used for the analysis. Because of the inclusion
of independent representation of governments' fiscal regimes (with
ncluson of drect and ndrect taxaton) and monetary polces wth a
range of targets, it is possible to study a range of policy regimes. To be
representative of short-run conditions, the model also allows for labour
market rgdty and departures from full employment.
In order to undertake the short-run analysis, a simulation of the long-
run effects of the accession commitments was first carried out. The results
allowed for a dervaton of nvestors' expectatons on the assumpton that
they took changes n long-run returns on nstalled captal nto account n
determnng short-run changes n ther nvestment behavour. The results
from the long-run simulation show the expected allocative efficiency gains
from the trade reform, which are reflected in increased GDP and increased
returns on installed physical capital, which induce greater investment and
larger net inflows on the capital account. The increased average long-run
return on nstalled captal s therefore part of nvestors' expectatons n
the short run and so tends to ncrease the level of nvestment n the short
run—even if capital controls are maintained. The trade reforms also cause
consumpton to swtch away from home-produced goods and the relatve
prices of such goods to fall, and hence there is a real depreciation. There
is also an increase in export competitiveness, and exports expand.
