1 Impact of China’s WTO Accession on Rural-Urban Income Inequality

versions of this paper. The usual disclaimer applies. 2 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 prices of some (land-intensive) farm products fall, other (labour-intensive) farm products could become more exportable. Also, the removal of restrictions on exports of textiles and clothing will boost town and village enterprises, so demand for non-farm workers in rural areas may grow even if demand for farm labour in aggregate falls. New estimates of the likely changes in agricultural prices as a result of WTO accession are drawn on to examine the factor reward implication of China’s WTO accession empirically using the global, economy-wide numerical simulation model known as GTAP. The results suggest farm-nonfarm and Western-Eastern income inequality may well rise but rural-urban income inequality need not. The paper concludes with some policy suggestions fo