Strategic Policies For The China Iron Industry

In the 1970s, as economists began to analyze the role of imperfect competition and increasing returns in international trade, New Trade Theories came into its shape. Correspondingly, strategic policies implied the rationality of trade protection.China has done a lot in eliminating its tariff and non-tariff barriers, as she promised when joining in WTO in 2001. But, quite a few industries in China still are not strong enough to play with international competitors. In this paper the author proves the rationality and necessity of implementing strategic policies in the China iron industry in an empirical way. The paper discusses and compares the different effects on gross national welfare of different tariff on iron imports, and also proves the existence of optimal tariff. In the end some suggestions on industrial policies in China iron industry come out for reference and discussion.