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GTAP Resource #4791

"China’s Structural Reform and Trade Impact: An Application of DPN GEM"
by Pei, Jiansuo, Cuihong Yang and Shunli Yao

1. Motivation
China is now a key part of the world production chain in many products and services. A distinct feature of China’s foreign trade regime are policies encouraging processing-export under which parts enter China duty free and after being processed or assembled, they have to be exported. These developments have complicated our understanding of Chinese foreign trade growth, China’s relations with key trading partners, and possible consequences of policy reform in China and other countries.

Conventional CGE models for Chinese trade policy analysis do not differentiate processing export and the rest of the Chinese economy, such as the DRC model with a focus on the impact of trade reform on Chinese regions and the standard GTAP model (Hertel and Tsigas, 1997). Economists have attempted to separate normal and processing trade in a CGE model for China (Ianchovichina, Martin and Fukase, 2000; Wang, 2003; Ianchovichina, 2004; Ianchovichina and Martin, 2004). The splitting work, however, is largely based on assumptions on key input-output coefficients and does not further differentiate export and domestic production sector.

Our proposed modeling work is an improvement along this line and it is made possible through construction of an innovative Chinese input-output table that differentiates domestic production, processing and normal trade sectors. This DPN IOT, based on extensive real data collection, constitutes the backbone of the database for an ORANI type China CGE model, known as DPN GEM.

2. Database and model
The core database is a tripartite IO table that has three heterogeneous production technologies as shown below: the D class, gives the production for domestic final use; the P class, represents the production of processing trade, only supplies overseas markets; and the N class, it provides other production for normal exports and for domestic final use. This classification of three production sectors are justified by the theory of and Chin...

Resource Details (Export Citation) GTAP Keywords
Category: 2015 Conference Paper
Status: Published
By/In: Presented at the 18th Annual Conference on Global Economic Analysis, Melbourne, Australia
Date: 2015
Version: 1
Created: Yao, S. (4/15/2015)
Updated: Yao, S. (12/16/2015)
Visits: 2,545
- Baseline development
- Economic development
- Domestic policy analysis
- Asia (East)

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