The Structure of Chinese Industry and the Impact from China’s WTO Entry Aimin Chen

Distribution of Chinese Employment by Enterprise Ownership, 1990 vs. 1998

SOEs as share of industrial output, employment, and firms

Industry concentration R = output/capacity in each industry R = output/capacity in each industry if R>1, then the key firms are unable to satisfy demand, and smaller firms make up the difference: more competition if R>1, then the key firms are unable to satisfy demand, and smaller firms make up the difference: more competition if R<1, then there is overcapacity: too many firms if R<1, then there is overcapacity: too many firms

Industry concentration

Why so many firms? one firm, one plant one firm, one plant local protectionism and subsidies rather than allowing the cruelties of the market to eliminate inefficient firms local protectionism and subsidies rather than allowing the cruelties of the market to eliminate inefficient firms exit barriers exit barriers diguised unemployment diguised unemployment inability to close due to unemployment that would be caused inability to close due to unemployment that would be caused

Impact of WTO entry Agriculture: strong Agriculture: strong uncompetitive uncompetitive Manufacturing: unclear Manufacturing: unclear varies by sub-sector due to monopolization and openness varies by sub-sector due to monopolization and openness reallocation of employment among sub- sectors reallocation of employment among sub- sectors

Impact of WTO entry Tertiary Tertiary first level: transportation, storage, telecommunications, sales: strong first level: transportation, storage, telecommunications, sales: strong second level: banking, insurance, real estate, etc. : strong, state monopolies disappear. second level: banking, insurance, real estate, etc. : strong, state monopolies disappear. third level: education, culture, sports, etc: little impact, state monopolies stay. third level: education, culture, sports, etc: little impact, state monopolies stay. fourth level: government agencies, political parties, etc: untouched fourth level: government agencies, political parties, etc: untouched

Multilateral Trade Negotiations and the Changing Prospects for Third World Development: Assessing from a Southern Perspective P. Sai-wing Ho

Introduction Reducing trade barriers hasn’t solved the development problems in many countries. Reducing trade barriers hasn’t solved the development problems in many countries. The GATT negotiations are based on mainstream economic theory. The GATT negotiations are based on mainstream economic theory. An alternative approach is required: north- south. An alternative approach is required: north- south.

MTNs and the Trade Evironment MTNs have reduced developing countries’ autonomy in setting development-related policies. MTNs have reduced developing countries’ autonomy in setting development-related policies. subsidies subsidies protection of nascent industries protection of nascent industries There is some Special and Differential treatment for developing countries (South) There is some Special and Differential treatment for developing countries (South)

MTNs and the Trade Evironment Trade-related aspects of intellectual property rights (TRIPS) impose patent and copyright requirements. Trade-related aspects of intellectual property rights (TRIPS) impose patent and copyright requirements. Trade-related investment measures (TRIMS) limit the ability to set local- content requirements. Trade-related investment measures (TRIMS) limit the ability to set local- content requirements.

North-South models North = developed, industrialized North = developed, industrialized South = less developed South = less developed institutional and structural differences institutional and structural differences The South suffers under unrestricted trade The South suffers under unrestricted trade restrictions should be placed on trade to protect the South restrictions should be placed on trade to protect the South transfer of technology is crucial transfer of technology is crucial

Quiz 2 What were the readings for today about? (main ideas only, no need to name the authors) What were the readings for today about? (main ideas only, no need to name the authors)