China’s membership in the World Trade Organization (WTO) and the exports of the developing economies of East Asia: a computable general equilibrium approach JOSE L. TONGZON Department of Economics, National University of Singapore, Kent Ridge Crescent, Singapore 119260, Email: ecsjt@nus.edu.sg There is a general perception particularly among the developing countries of East Asia that China’s WTO membership would spell bad news for their exports. The ASEAN countries in particular are quite concerned about its likely negative impact on their export and growth potentials. In this light, the main objective of this paper is to empirically assess the trade implications of China’s WTO membership for these countries. Only few studies, using a Computable General Equilibrium (CGE) approach, have addressed the issue of China’s WTO membership trade implications. Further, these studies have not adequately addressed the issue from the perspective of the developing countries of East Asia, particularly the ASEAN countries. Using the latest version of the Global Trade Analysis Project (GTAP) model and based on the latest tariV reduction commitments by China, the results showed that, contrary to the current perception and previous studies, almost all of the developing countries of East Asia are likely to bene®t from China’s WTO membership overall, after allowing for anticipated price adjustments. Without the price adjustments, the Philippines and Singapore would have come out as net losers. These ®ndings have con®rmed the need for economic and export restructuring among the ASEAN countries and the importance of accelerating their economic integration. They have also highlighted the importance of promoting trade and investment cooperation between China and ASEAN countries. I. INTRODUCTION No doubt, exports have been one of East Asia’s engines of growth and economic development. For the past three dec- ades the developing economies of East Asia (i.e. the Newly Industrializing Economies or NIEs, and the ASEAN coun- tries) have achieved remarkable economic and social pro- gress largely due to their successful export-oriented policy, which was only interrupted by occasional economic crises: one was in 1985 and most recently in 1997. 1 Recent developments have indicated that these countries are on their way to economic recovery with exports showing a signi®cant turnaround. However, as they are trying to recover fully from the recent devastating crisis, there is one development, which could either threaten or reinforce their long-term economic recovery ± China’s membership in the WTO. Political considerations aside, admitting China into the WTO will certainly have some positive implications for the world economy as it oVers a large market potential and Applied Economics ISSN 0003±6846 print/ISSN 1466±4283 online # 2001 Taylor & Francis Ltd http://www.tandf.co.uk/journals DOI: 10.1080/0003684011006935 4 Applied Economics, 2001, 33, 1943±1959 1943 1 In this paper the NIEs include S. Korea, Hong Kong and Taiwan while the ASEAN countries include Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Due to data unavailability, the other members of ASEAN are not included in the analysis. ASEAN means Association of Southeast Asian Nations.