replace domestic goods and the magnitude of bankruptcies of inefficient state and nonstate firms. Estimates of the employment elasticity by sector and time period show that it has declined in primary and secondary sectors (table 3), but is generally higher in the tertiary sector, which is likely to absorb the bulk of displaced labor as a result of the accession.

**<u>Table 3.  Employment Elasticity of Output (in periods)</u>**

|_Period_|_Primary_|_Secondary_|_Tertiary_|
|---|---|---|---|
|1955-59|-9.64|0.57|1.83|
|1960-64|2.70|-0.15|0.99|
|1965-69|1.10|0.12|2.32|
|1970-74|0.50|1.35|0.39|
|1975-79|-0.05|-0.19|3.98|
|1980-84|-0.09|0.89|0.70|
|1985-89|0.52|0.29|0.43|
|1990-94|0.22|1.00|2.00|
|1995-99|-0.07|0.09|0.51|

Note: Elasticity in each period is an average of annual figures. Source: Calculated based on the data from the _China Statistical Yearbook_ , and _China Labor Statistical Yearbook_ , various years. Bhalla, A. S., and S. Qiu, 2002.

Generally speaking, a negative impact of the accession on employment will be felt through import competition and the resulting closure of inefficient domestic firms, especially SOEs and collectives. However, this impact will not be evenly spread across sectors and industries. Most researchers believe that the potential for employment growth is minimal or negative in such sectors as agriculture, automobiles, machinery and instruments. Some estimate that employment in the agricultural sector will be reduced by 9.66 million (or 3.6 percent of the current total), automobiles 4.98 million (14.5 percent of the total), and machinery and instrument 5.82 million (2.5 per cent of the total) in seven years after the accession. 15 Ianchovichina and Martin assessed the changes in output and employment in selected Chinese industries due to WTO accession for the period after 2001. They estimate that an employment gain might occur in the following industries: plant based fibers, livestock and meat, clothing, light manufacturing and electronics. On the other hand, employment will decline in foodgrains, feedgrains, vegetables and fruits, oilseeds, beverages and tobacco, petrochemicals, metals, automobiles, communication, and commercial services, etc. Furthermore, for the period of 2001-2007, approximately 6 million farm workers will leave their farm jobs as a result of WTO accession reform after 2001 to pursue employment in non-agricultural sectors. 16 Bhalla and Qiu also think that China has no comparative advantage in foodgrains, feedgrains, and oilseeds because they are land-intensive crops and China’s domestic prices for these commodities are much higher than world prices. But they think in other primary export products including meat, fishery products, vegetables, fruits and tobacco, China will still maintain a comparative advantage as these products do not need much land and can utilize redundant labor. 17 They also presented a general picture of WTO impact on the Chinese industry by a matrix of industry ownership, openness, technology

> 15 _Beijing Evening News_ , 18 November 1999.

> 16 Ianchovichina, Elena, W. Martin, _Economic Impacts of China’s Accession to the World Trade Organization_ , World Bank Working Paper, the World Bank, May 2003.

> 17 Bhalla, A. S. and S. Qiu, “China’s Accession to WTO: Its Impact on Chinese Employment”, UNCTD discussion paper, No. 163, November 2002.

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