A baseline for next 15 years is first established under a set of assumptions, which determines a reference growth trajectory, in the absence of trade or other reforms for both the Chinese and global economies. Then we consider some simulation scenarios. After calibrating the base scenario, the first scenario exams the impact of Uruguay Round trade liberalization in the absence of China's participation. Thus, the impact of MFA elimination is derived from global trade. Finally, the simulation results are used to impute the impacts of WTO admission on the Chinese textile and cotton industry.
China has a comparative advantage in textile and clothing production.
Thus, the implementation of ATC would provide China not only accelerated quota growth for its exports of textiles and apparel during the phasing-out period but also the opportunity to compete with many other textile exporters when all quotas are eliminated by 2005. Table 2 provides a summary of the simulation results of how the textile and cotton industry would be affected by WTO accession. All the quantities in the table are imputed based on the raw fibre equivalent. China's WTO admission would bring about nearly 37 percent increase in textile and clothing output. This substantial increase largely results from the surge in exports, which would increase by nearly 100 percent compared with the base scenario.