The impact of China's WTO accession on trade and economic relations across the Taiwan Strait

This paper evaluates the impact of China's World Trade Organisation (WTO) accession on trade and economic relations across the Taiwan Strait and its implications for the rest of the world by a recursive dynamic, 17-region, 25-sector computable general equilibrium (CGE) model according to actual market access commitments that China and Taiwan have made to date. The simulation results show that both China and Taiwan will substantially benefit from their WTO memberships, and their economic interdependence and their dependence within the rest of the world will further deepen. The rest of the world may also benefit because of the expansion of world trade and improvement of their international terms of trade, but some developing countries with an endowment structure similar to China, like those in South America and Southeast Asia, may experience keener competition in labour-intensive exports and lower prices for their products.