Impact of the WTO Membership, Regional Economic Integration, and Structural Change on China's Trade and Growth

The growing economic and political importance of China in the global economy in recent years has been discussed by academic and business economists, trade and investment experts, transnational corporate planners, government advisers, and politicians worldwide. While the discussions have been useful for global knowledge enhancement, and regional and national strategic purposes, they have often been regarded as "hypothetical or with fuzzy outcomes" due to their lack of substantive support. The paper addresses the issue by applying the recent generalized gravity theory to construct a new multi-equation econometric model of trade-growth causality for China. Using historical trade and growth data and advanced estimation, the model provides substantive evidence for the intertwining impact of China's trade and economic activities, WTO membership, regional economic integration, national, regional and global shocks, and gradual policy reforms on China's trade, growth, and economic relations. Some resulting major strategic trade, development and cooperation issues will also be discussed. Copyright (C) 2010 Blackwell Publishing Ltd.