The Impact of WTO Membership on Economic / Trade Relations Among the Three Chinese Economies--China, Hong Kong and Taiwan

Abstract

Based on CGE model simulations, the present study examines the impacts on the growth of GDP, social welfare, the terms of trade, the volume of trade and trade dependence, under alternative scenarios of a WTO with and without the membership of China and Taiwan. In general, the three Chinese economies, China, Hong Kong and Taiwan, will be benefited by China and Taiwan’s WTO memberships. The world trade will increase by more than $130 billions in real terms ($ 63.6 billions of export and $ 66.5 billions of import). Among them, more than 60 percent will be shared by China, and 10 percent shared by Taiwan. The intermediate role of Hong Kong in trade and investment relations across the Taiwan Strait will diminish, Taiwan’s trade dependence on China will increase, but China’s trade dependence on Taiwan will decrease. However, trade flows across the Taiwan Strait will focus more on intra-industry trade