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Long-Run Impacts of China’s WTO Accession on Farm-
Nonfarm Income Inequality and Rural Poverty*
† ‡ §
Kym Anderson, Jikun Huang, and Elena Ianchovichina
Abstract
Many fear China’s accession to WTO will impoverish its rural people, via greater import
competition in its agricultural markets. We explore that possibility bearing in mind that, even if producer prices of
some (land-intensive) farm products fall, prices of other (labor-intensive) farm products could rise. Also, the
removal of restrictions on exports of textiles and clothing could boost town and village enterprises, so demand for
unskilled labor for non-farm work in rural areas may grow even if demand for farm labor in aggregate falls. New
estimates, from the global, economy-wide numerical simulation model known as GTAP, of the likely changes in
agricultural and other product prices as a result of WTO accession are drawn on to examine empirically the factor
reward implications of China’s WTO accession. The results suggest farm-nonfarm and Western-Eastern income
inequality may well rise within China but rural-urban income inequality need not. The paper concludes with some
policy suggestions for alleviating any pockets of farm household poverty that may emerge as a result of WTO
accession.
Key words: WTO accession, China’s economic reform, rural-urban income inequality
JEL codes: F14, O19, O53
World Bank Policy Research Working Paper 3052, May 2003
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange
of ideas about development issues. An objective of the series
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