China`s Gains from WTO Accession: Imports vs Exports

Abstract

We examine the gains from Chinese accession to the World Trade Organization (WTO). We provide a new quantitative welfare measure by dividing the manufacturing sector into import and export sub-sectors. We then evaluate how the increased openness caused by China`s accession to the WTO effects the importing and exporting sectors. We find surprisingly that the gains to the import sector are larger than the gains to the export sector. Moreover, the size and the dynamic pattern of such gains are different across sectors. Overall, sectors with larger intermediate input shares from import-competing industries and with domestic demands less sensitive to changes in trade costs have higher welfare gains from trade liberalization.