This paper is concerned with the interaction of regulated efficiency and World Trade Organization (WTO) accession and its impact on China’s motor vehicle sector. The analysis is conducted using a 23 sector–25 region computable general equilibrium model. Regulatory reform and internal restructuring are found to be critical. Restructuring is represented by a cost reduction following from consolidation and rationalization that moves costs toward global norms. Without restructuring, WTO accession means a surge of final imports, though imports of parts could well fall as production moves offshore. However, with restructuring, the final assembly industry can be made competitive by world standards, with a strengthened position for the industry.

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Tinbergen Institute Discussion Paper Series
Tinbergen Institute

François, J.F, & Spinanger, D. (2004). Regulated Efficiency, World Trade Organization Accession, and the Motor Vehicle Sector in China (No. TI 04-049/2). Tinbergen Institute Discussion Paper Series. Retrieved from