By World Bank
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Extra info for China: foreign trade reform
Chen Jiaqin, Li Xiaoxi, Yang Shangxiang, Yu Lixin, Feng Yuan, Zhang Li and Lu Shengliang. Special thanks are owed to Mr. Ji Chongwei, Senior Research Fellow of the Development Research Center, Mr. Liu Xiangdong, Assistant Minister, Ministry of Foreign Trade and Economic Cooperation (MOFTEC), and Mr. Song Haipeng, Deputy Director General of the State Administration of Exchange Control (SAEC) for their guidance and suggestions. Acknowledgments are also due Mr. Qiu Xichun, Deputy Division Chief, Department of Policy and Development, MOFTEC, and Mr.
There could be a number of strategies for such a reform effort, and the report examines six alternatives through a simulation exercise. The results of the simulations provide several useful pointers. First, they suggest that China should be able to undertake deep cuts in tariffs and NTBs without this resulting in any major contraction of even the most protected sectors such as textiles and machinery. In a country of China's size, domestic consumption relative to imports can be expected to remain large and domestic dislocations are likely to be limited because of the considerable differentiation between imports and domestic production.
Second, fulfillment of the targets in the contract is a precondition for awarding bonuses to officials responsible for carrying out the export plan. Each province's contractually determined targets are in turn disaggregated and assigned as targets to 1/ This figure needs to be treated with caution. First, China's GNP is likely to be underestimated. Second, customs statistics on exports include the full value of exports based on processing of imported inputs, which tends to exaggerate the role of trade in the Chinese economy.