China emerged as the largest recipient of foreign direct investment (FDI) and the fifth largest trading nation in the world in 2002. China’s entry into the World Trade Organization (WTO) represents a huge stride forward in its reform efforts. These reforms include liberalization and modernization of China’s economy (in industrial, services, and agricultural sectors) and trading activities.

China’s growing economy, its international trade, and its large inward FDI have significantly affected the growth of global trade, the distribution of global direct investments, and the pace of expansion of global output. There is no other country in history, as a WTO member, to have achieved such expansion in a comparable time period. China is expected to be influential in future rounds of WTO trade negotiations. As the only major trading nation that is not classified as an advanced industrial economy, China is bringing an unparalleled perspective to the negotiations and exerting its power on matters important to its trade. China, as a new WTO member, is posing momentous opportunities and challenges to the United States and other countries.

A study of the Chinese economy after entering the WTO should be of importance to practitioners, scholars, and policymakers because of China’s vast size, its rapid growth in foreign trade and FDI inflows, and the unprecedented speed of its integration into the world economy. The high quality of the chapters within this volume and their authors’ expertise unite to make this book a most timely contribution to our understanding of China’s rapidly changing economy and its transformation toward globalization after entering the WTO.

This volume is divided into four parts. The first part deals with economic performance after China’s accession to the World Trade Organization. The second part relates to the WTO and China’s economic welfare. The third part deals with China’s financial reforms and capital markets, and the last part discusses China’s industrial and agricultural development. In total, we have eighteen chapters that will shed light on the Chinese economy and the challenges posed by WTO membership.

part I|60 pages

Economic Performance After China’s Accession to the World Trade Organization

chapter 1|20 pages

An Analysis of China’s Foreign Trade After WTO Accession

ByChanghong Pei, Jinjian Shen

chapter 2|13 pages

Foreign Direct Investment

Opportunity or Challenge for China After WTO Membership?
ByKevin H. Zhang

chapter 3|15 pages

China’s WTO Compliance

Commitment and Progress in the Initial Stage
ByPenelope B. Prime

chapter 4|10 pages

After Accession to the WTO

Foreign Direct Investment Flows in Western China
ByYing-Qiu Liu

part II|81 pages

The WTO and China’s Economic Welfare

chapter 5|20 pages

Foreign Direct Investment and Income Inequality

ByXiaodong Wu

chapter 6|13 pages

A New World Factory and China’s Labor Force

ByYan-Zhong Wang

chapter 7|12 pages

China’s WTO Membership

Commitments and Challenges
ByNini Yang

chapter 8|13 pages


Rebuilding the Framework of China’s Welfare Regime
ByBing-Wen Zheng

chapter 10|8 pages

China’s Employment and WTO Accession

ByJu-Wei Zhang

part III|90 pages

Financial Reforms and Capital Markets

chapter 11|19 pages

China’s Financial Reform in Banking and Securities Markets

ByHung-Gay Fung, Qingfeng “Wilson” Liu

chapter 12|19 pages

How Do Chinese Firms Raise Capital?

An International Comparison
ByHung-Gay Fung, Wai Kin Leung, Stanley J. Zhu

chapter 13|24 pages

The Debt Financing Gap for Small Business in China

ByChangwen Zhao, Kun Li

part IV|67 pages

Industrial and Agricultural Development

chapter 15|18 pages

Openness and China’s Industrial Locations

An Empirical Investigation
ByTing Gao

chapter 16|20 pages

Agricultural Policy Developments After China’s Accession to the WTO

ByFrancis Tuan, Agapi Somwaru, Xinshen Diao

chapter 18|18 pages

Recent Development of the Petroleum Industry in China

ByWai-Chung Lo