Impact of Chinas WTO Accession on East Asia

Abstract

The industrialized and newly industrializing economies (NJEs) in East Asia will benefit from China's WTO accession, and the developing economies in the region may incur small welfare losses. China will increase its demand for high-end manufacturing products from Japan and the N/Es and farm products, natural resources, and manufactured goods from developing East Asia. New foreign investment may flow into these expanding sectors. The overall impact on foreign investment is likely to be positive in the NJ Es but negative in developing East Asia. The NIEs may face heightened competition in global markets as China's comparative advantage shifts into high-end products. (JEL Fl 1, FI 3, Fl 5)