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Opinion
Mihir Sharma, Columnist
Is China a Developing Nation? I Don’t Think So
It should be treated like the dominant economic power it now is.September 4, 2023 at 12:00 AM GMT+3
By Mihir Sharma
Mihir Sharma is a Bloomberg Opinion columnist. A senior fellow at the Observer Research Foundation in New Delhi, he is author of “Restart: The Last Chance for the Indian Economy.”
What’s in a name?
Photographer: Qilai Shen/Bloomberg
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Can a rich country still be a “developing country?” Objectively, if the term is to have any meaning, the answer may soon be no. But President Xi Jinping is powerful enough to redefine objective reality, and did so at the BRICS summit recently: “China has been and will always remain a member of developing countries,” he insisted.
This led to much hilarity online, where China watchers asked each other if this was Xi’s way of publicly noting that his nation’s period of high growth had come to an end. But it was clear, from the way the phrase was subsequently highlighted by the foreign ministry and others in the state media, that something important was concealed in the words, beyond a simple statement of solidarity with others at the summit.
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And there was. China’s self-determination of its developing-country status provides it with both tangible and intangible benefits that it is loath to give up. In order to enter the World Trade Organization in 2001 it relinquished some, but not all, of these special benefits. Last year’s WTO negotiations over fisheries subsidies, for example, wound up with a less ambitious agreement because the natural way to manage overfishing — stricter rules for rich countries with large and modern fleets, more relaxed ones for poorer ones with small-scale, artisanal fishing communities — was ruled out. That’s because China’s huge and aggressive trawler fleet was one of the main problems any agreement needed to address, and attempts to control subsidies to these vessels responsible for overfishing would also require much poorer countries to end support to their subsistence fishermen.
Unsurprisingly, a lot of people are dissatisfied with this state of affairs. The bluntest complaints have come — again, this is not a surprise — from the US Congress. Earlier this year, Senator Mitt Romney introduced a bill ordering the State Department to “advocate” for mechanisms to change China’s status to a developed country. Fortunately, there are other slightly more realistic efforts afoot. The top trade officials of Japan, the US, and the European Union agreed three years ago to at least ensure that “advanced WTO members claiming developed country status” would take on the commitments associated with developing countries in any future negotiations. They wanted “advanced” developing countries — in particular, China — to be treated like the rich world. This would, in turn, allow poorer economies to retain the special treatment they deserve.
There has, however, been no attempt to create a broader coalition around the question of China’s status. That’s a pity — it plays right into Xi’s hands. It isn’t just the US, EU and Japan that need to reset relations with Beijing. All of us, especially in real developing countries, need to recognize that China no longer needs any developing-nation exceptions and privileges, but should be treated like the dominant economic power it now is. Piecemeal efforts by the EU and the US to first confront and then pacify Beijing — visible in Commerce Secretary Gina Raimondo’s recent visit – need to be better organized. And they need to find allies in the developing world.
This is precisely what Xi fears, and is trying to forestall. When he says “China will always be a developing country” regardless of how rich it gets, he is trying to turn the phrase from a formal categorization into an identity. If he succeeds, the intangible benefits kick in: it locks in support, permanently, from the Global South. Beijing will then forever speak as the representative of the vast majority of the world’s population — even when its actual words are meant only to advance its own narrow interests.
It is the Global South that suffers the most from this, as it means no international negotiations leave place for their special needs if one of the world’s dominant economies can also access them. Some in emerging markets are waking up to how dangerous this dynamic is. India may be one of those places. In the past, such as when the two countries together torpedoed a climate agreement in Copenhagen in 2009, New Delhi allowed itself to be bracketed with China in the world’s eyes. But India suffers, both in terms of image and in practical terms, by pretending it has the same interests as a country five times richer, and that emits four times as much carbon per capita. Perhaps that’s why, at China’s last WTO trade policy review, the Indian delegates for the first time asked how a country that the World Bank says is “upper-middle income” can still claim developing status.
China’s development story has been one of the world’s greatest economic miracles. Success comes with responsibilities, however. Among them is the willingness to accept you can no longer claim to lead or represent those who are still struggling upward.