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Friday, October 24, 2014
- Is China still a developing country or has it joined the ranks of the advanced developed countries?
This has become a pressing question, especially after the US President Barack Obama reportedly told President Hu Jintao that China had to act more responsibly now that it has grown up.
What Obama meant was that China should now be treated just like the US or Europe in terms of international obligations like reducing greenhouse house gas emissions, cutting its tariffs to near zero and giving up its subsidies under the World Trade Organisation, giving aid to poor countries, and letting its currency float.
This is what the US has been pressuring China to do. In fact, most of the important multilateral negotiations are stalled because the US (with the backing of Europe and Japan) is insisting that China give up its developing-country status and take on the obligations of a developed country. They also want India and Brazil to do likewise. South Africa and the wealthier or bigger Asean countries are also mentioned in this regard.
So the question is crucial: is China a developed country?
The answer depends on what criteria are used. In absolute terms, China is indeed a major economy. Its Gross Domestic Product (GDP) is second only to that of the US. It has become the biggest emitter of Greenhouse Gases, having overtaken the US.
But this is mainly because China, with 1.3 billion people, is the world’s most populous country.
However, despite the mighty image it has been given by the world media, China looks like a very ordinary developing country once we look at per capita indicators.
The UN, the International Monetary Fund and World Bank have established clear criteria distinguishing developed from developing countries, the most important of which is income per capita.
The IMF classifies China as a developing country, with 2010 per capita GDP -USD 4,382- a lowly 91 of the world’s 184 countries.
Six African countries (Equatorial Guinea, Gabon, Botswana, Mauritius, South Africa, Namibia) had per capita GDP levels higher than China’s which was less than a tenth of that of the United States, USD 46,860. Luxembourg had the highest ranking, with USD 108,952.
The World Bank divides countries into four income groups: low income countries, with per capita income below USD 1005; lower middle-income countries, with per capita income USD 1006-3,975; upper middle-income countries, USD 3,976-12,275; and high income countries with income above USD 12,276.
According to World Bank figures, China’s GNP per capita was USD 2050 in 2006, USD 2490 in 2007, USD 3050 in 2008, USD 3650 in 2009, and USD 4260 in 2010.
In fact, China has been in the category of lower-middle income countries until it crossed over to upper middle income in 2010.
Economists also use the measure of per capita purchasing power (or GPP) to take into account the variations in the cost of living among different countries. People living in countries with a lower cost of living could enjoy a higher living standard than their country s GNP implies.
In 2010, in GDP (at GPP) per capita terms, China was lower still at number 95 with USD 7,544, just below Ecuador and Bosnia and Herzegovina, and just above Albania, El Salvador, Tonga, and Guyana.
The UN Development Programme human development index (HDI) measures quality of life in terms of income, schooling, life expectancy, and other indices. The 2011 Human Development Report places China 101 of 187 countries with a HDI of 0.687.
What about environment measures? Although it is the top greenhouse gas emitting country, in per capita terms China’s emissions level – 5.5 CO2-equivalent per person- ranked 84 in the world. In contrast, the US per capita emission was 23.4 CO2 equivalent.
China, therefore, ranked 91 in GDP per capita, 101 in the human development index, and 84 in per capita CO2 emissions, is a middle-level or even lower-middle level developing country, below not only all the developed countries but also many developing countries.
China shares other characteristics of developing countries: more than 600 million of its 1.3 billion people live in the rural areas, and in 2008 urban disposable household income was on average 3.3 that in rural areas.
Of course, this is not to deny the high points in China’s development: its big GNP in absolute terms, its high rate of economic growth, and its the foreign reserves of over USD 3 trillion.
To put it most precisely, while China has become a major economic power in absolute terms, it is still a middle-level developing country with the socio-economic problems that most developing countries have.
And if China is pressured to assume the duties of a developed country and forgo its status of a developing country, many other developing countries that are ahead of China may soon be asked to do the same. The ramifications of how the status question is answered are thus wide-ranging. (END/COPYRIGHT IPS)
(*) Martin Khor is the Executive Director of the South Centre in Geneva.