Opinion / Op-Ed Contributors

China still a developing nation

By Martin Khor (China Daily) Updated: 2011-11-25 08:08

China still a developing nation

Is China still a developing country, or has it joined the ranks of developed countries? The question became more topical after US President Barack Obama reportedly told Chinese leaders that China had to act more responsibly now that it has "grown up."

By saying it is now a "grown-up", Obama wants China to be treated like the United States or Europe in terms of international obligations. For example, China should take on binding commitments to reduce greenhouse gas (GHG) emissions, cut its tariffs to near zero and stop subsidizing its agricultural and other sectors, provide aid to poor countries and let its currency float.

The West not only wants India and Brazil to do likewise, but also mentions South Africa and wealthier or bigger ASEAN countries in the same breath. Its focus, however, is China. There has been growing respect for, rather fear of, China because it is growing so fast and has become so big and powerful that it could "swallow" the Western world in a decade or two.

And hence, the question: Is China a developed country? The answer depends on the criteria used to describe a developed country. China is indeed a big economy. Its GDP is second only to the US. And it has overtaken the US in greenhouse gas emission.

The fact is, with more than 1.3 billion people, China is also the world' s most populous country. India is not far behind with 1.2 billion people and is on track to overtake China in two decades. And despite the world media giving it a mighty image, China looks like a very ordinary developing country in terms of per capita indicators.

According to the United Nations, International Monetary Fund (IMF) and the World Bank, the most important criterion to judge whether a country is developed or developing is its per capita income. By that yardstick, China is very much a developing country.

In its latest World Economic Outlook, the IMF classifies China as a developing country because the mainland's per capita GDP was $4,382 in 2010, ranked lowly at 92 among 184 economies.

Six African countries (Equatorial Guinea, Gabon, Botswana, Mauritius, South Africa and Namibia) have per capita GDP higher than China. And its per capita GDP is less than one-tenth of the US.

The World Bank classifies countries into four income groups. Its latest report divides economies according to per capita gross national income (GNI):

Low-income: Countries with per capita GNI below $1,006.

Lower-middle-income: Countries with per capita GNI between $1006 and $3,975.

Upper-middle-income: Countries with per capita GNI between $3,976 and $12,275.

High-income: Countries with GNI above $12,276.

The World Bank classifies all low- and middle-income countries as developing. According to its figures, China's per capita GNI was $2,050 in 2006, $2,490 in 2007, $3,050 in 2008, $3,650 in 2009 and $4,260 in 2010, which means it was a lower-middle-income country until 2009.

Many economists use per capita purchasing power parity (PPP) to categorize a country, because people living in countries with a lower cost of living could enjoy a higher living standard than their country's GDP implies. With per capita GDP (at PPP) $7,544 in 2010, China was placed 96th in the world . It was just below Ecuador, and Bosnia and Herzegovina, and just above Albania, El Salvador, Tonga and Guyana. In contrast, Malaysia was at 58th with per capita PPP of $14,744 while Singapore was 3rd with $56, 694.

The UN Development Programme has a human development index (HDI) that measures quality of life in terms of income, schooling, life expectancy and other factors. The 2011 Human Development Report shows China lies at 101 in a list of 187 countries and regions with an HDI of 0.687 and in the category of "medium human development". It is below many other developing countries such as Chile, Argentina, Barbados, Uruguay, Cuba, Bahamas, Panama, Malaysia, Libya, Grenada, Lebanon, Venezuela, Mauritius, Jamaica, Ecuador, Brazil, Iran, Tongo and Tunisia.

What about climate change? Again mainly because of its huge population, China's GHG emission is high. China emitted 7,232 megaton of carbon dioxide (CO2) equivalent in 2005. The US was second with 6,914 megaton and India fifth with 1,859 megaton. But in per capita terms, China's emission level was 5.5 megaton of CO2 equivalent and it was the 84th highest GHG emitter among 186 countries and regions. In contrast, the US' per capita emission was 23.4 megaton of CO2 equivalent, Australia's 27.3, Canada's 22.9, Russia's 13.7, Germany's 11.9, Japan's 10.5, Singapore's 11.4, Malaysia's 9.2, South Africa's 9.0, Brazil's 5.4, Indonesia's 2.7, India's 1.7, Tanzania's 1.5 and Rwanda's 0.4.

Therefore, being 92nd in terms of per capita GDP, 101st in HDI and 84th in terms of per capita emission, China is a middle-level or even lower-middle-level developing country, with not only all the developed countries, but also many developing countries ahead of it.

Besides, China shares quite a few characteristics with many developing countries. More than 700 million of its 1.3 billion people live in rural areas, and as of 2008 there was a large imbalance between urban and rural areas, with urban disposable household income being 3.3 times higher.

According to China's criteria, 43 million of its people belong to the low-income (below $160 a year) group. But by UN standards, 150 million Chinese are poor, for they live on less than 1 US dollar a day. Besides, around 12 million Chinese people, more than Greece's entire population, enter the job market each year and it's quite a task to get them employed.

Despite all this, China has its high points. Its GNP is big in absolute terms, and it has a high rate of economic growth and high foreign reserves (over $3 trillion). Nevertheless, China is still a middle-level developing country and is burdened with socio-economic problems that most developing countries have.

So if China is forced to take on the duties of a developed country and forego the benefits of a developing country, the West could soon ask other developing countries that are ahead of China (at least in per capita terms) to do the same.

Thus China's fight to retain its developing country status is of interest not only to the Chinese people, but also to their counterparts in other developing countries.

The author is executive director of South Centre, a think tank of developing countries, based in Geneva.

(China Daily 11/25/2011 page9)

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