China is still a developing country despite what US leaders might say

In recent years, American politicians have been seeking to challenge China’s status as a developing country
Despite building a ‘moderately prosperous society’, the Chinese economy is still not considered high-income, and parts of the country still face unbalanced development

Jiang Shixue

Published: 5:30am, 29 Apr 2024

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The question of whether China is still a developing country has attracted international attention in recent years. Needless to say, becoming a developed country is the aspiration of many Chinese people. However, China is still a developing country.

A decade ago, Chinese President Xi Jinping delivered a speech addressed to the College of Europe in Bruges, Belgium, during which he summarised five of China’s significant characteristics: it is a country with a long history of civilisation, it has experienced deep suffering in the past, it adopts socialism with Chinese characteristics, it is the largest developing country in the world, and it is a country undergoing profound changes.

At the 2022 High-Level Dialogue on Global Development, Xi said China has always been a member of the big family of developing countries.

However, the United States does not want to recognise China’s status as a developing country. In 2019, the Trump administration published a memo on developing-country status in the World Trade Organization (WTO). “Since joining the WTO in 2001, China has continued to insist that it is a developing country and thus has the right to avail itself of flexibilities under any new WTO rules,” the memo said. “The United States has never accepted China’s claim to developing-country status, and virtually every current economic indicator belies China’s claim.”

In 2022, the US Senate voted unanimously in favour of an amendment conditioning the Senate’s ratification of updates to the Montreal Protocol, known as the Kigali Amendment, on taking action to remove China’s designation as a developing nation.

In March 2023, the US House of Representatives passed the PRC Is Not a Developing Country Act, which would require the Department of State to take action to stop China from being classified as a developing country by international organisations. The US Senate Foreign Relations Committee approved a similar bill a few months later.

A delivery worker rides near a giant screen in Beijing, China showing Chinese President Xi Jinping at an event celebrating the 100th anniversary of the Communist Youth League of China on May 10, 2022. Photo: Reuters

It is true that China has become the world’s second-largest economy. At a speech marking the 100th anniversary of the Communist Party, Xi said, “[China has] realised the first centenary goal of building a moderately prosperous society in all respects [and is] marching in confident strides toward the second centenary goal of building China into a great modern socialist country in all respects.”

However, there are five key reasons why China must still be considered a developing country.

Firstly, major international organisations still regard China as a developing country. The Handbook of Statistics, published by the United Nations Conference on Trade and Development, classifies all countries into developed countries, developing countries and least developed countries. China is categorised as a developing country based on the 2023 statistics.

According to the WTO, any member can identify itself as a developed economy or a developing economy as long as others do not challenge this identification. Currently, there are 164 developing economies in the WTO, including China.

Secondly, China does not qualify as a high-income country, based on World Bank standards. The World Bank classifies different economies of the world into low-income economies, lower-middle-income economies, upper-middle-income economies and high-income economies based on their gross national income (GNI) per capita.

The World Bank considers a GNI per capita higher than US$13,845 as high-income and lower than US$1,135 as low-income. Economies with a GNI between US$4,466 and US$13,845 are upper-middle-income. China’s GNI per capita has not yet crossed the threshold of US$13,845, putting it squarely in the upper-middle-income grouping of countries. The Organization for Economic Cooperation and Development (OECD) similarly ranks China as an upper-middle-income country.

Workers socialise at a garment factory in Kaili, Guizhou province on October 18, 2020. The factory employs 100 people as part of local efforts to alleviate poverty and boost residents’ incomes. Photo: Xinhua

Thirdly, correlating a country’s economic size with its level of development can be misleading. In 2023, US Representative Young Kim said that, “China is the second-largest economy in the world, accounting for 18.6 per cent of the world economy”, second only to the US. On that basis, she argued that China takes advantage of its developing-country status to apply for development loans from international organisations.

Such an assertion is completely unjustified. A country with a small economic size may be either a developed country or a developing country. Similarly, a country with a large economy may be a developed country or a developing country. In other words, the primary factor that determines a country’s development level is not the size of its economy, but its actual level of development.

Fourthly, purchasing power parity (PPP) cannot reflect a country’s development level. The World Bank uses PPP to measure the economic size of various countries. According to this methodology, China’s gross domestic product (GDP) in 2022 was US$30.3 trillion, making it the world’s largest economy. However, using PPP to define a country’s development level is far-fetched. PPP tends to exaggerate the size of the developing economies.

Finally, China’s overall development level is still below that of the developed countries. Although its major cities such as Beijing, Shanghai, Guangzhou and Shenzhen are quite highly modernised, unbalanced and inadequate development is still evident across the country, especially in western China.

Just four years ago, then Chinese premier Li Keqiang said there were still 600 million people whose average monthly income was only about 1,000 yuan (US$140). Many people in China still face problems when it comes to employment, education, medical care, childcare, elderly care and housing.

China’s economy still faces many challenges, and the Chinese people still need to work hard before it can become a fully developed country. At the same time, China will continue to fulfil its global responsibility as a large developing country and make its contributions to South-South cooperation.

Jiang Shixue is a distinguished professor at Macau University of Science and Technology