Why is China still a developing country?

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Despite a dramatic increase of its GDP, China is still a "rising developing country" rather than a developed one, writes Song Zhe, China's Ambassador to the EU.

The following contribution is authored by Song Zhe, the People’s Republic of China's Ambassador to the EU.

"Not long ago, many media outlets covered the story that in the second quarter this year, China's GDP figure and growth rate had surpassed Japan’s. This has triggered arguments that China has become the no.2 in the world and that China is no longer a developing country but a strong economic power. Views like such are shared by much of Europe’s media as well.

Judging by the size of GDP alone, it is fair to argue that China is now the world's second largest economy. The economic strength of China has indeed recorded significant growth over the last three decades through reform and opening up. As a Chinese, I am proud of the fact that today’s China enjoys much stronger international standing.

That said, there is absolutely no basis to the argument that China is no longer a developing country but a developed one. China's GDP is only one of many indicators of our economy, and it is by no means a sufficient proof that the Chinese people are even nearly as wealthy as the Japanese people.

In fact, way behind Japan in science and technology, production level, and living standard, we still have a long way to go before we can call ourselves a strong and wealthy nation. Although size matters, a wholistic and simplistic approach is not enough for a fair understanding of a country as populous as China.

With per capita GDP at only 3,700 US dollars, China is among middle and low income level countries, ranking below the 100th place in the world behind Cape Verde and Algeria. In terms of per capita possession of natural resources, China is far behind the majority of the developed world. In some cases, we are even far below the world’s average. In per capita terms, our fresh water reserve is only 1/3 of the world’s average, coal consumption 1/2, and natural gas 1/5.

In China, 150 million people, equivalent to the total Russian population, are caught in poverty according to the UN standard, living on less than 1 US dollar a day. By our own definition, 35.97 million rural residents, equivalent to the size of Polish population, were living in poverty as of 2009, with a yearly income under 175 US dollars. 83 million people in China are living with disabilities, matching the total population of Germany. Each year, 12 million people are newly added to our job market, outnumbering the total population of Greece.

China is still at the lower end of the global industrial chain. Our trade mix is dominated by commodity trade that is resource and labour consuming. The knowledge-based trade in services only accounts for a small portion in our foreign trade however. Due to our modest production level and reliance on conventional industries with low added value, the energy intensity of China’s GDP is much higher than the world’s average, let alone that of the developed countries.

Our shortfalls in scientific and technological innovation capacity impede our core-competitiveness. Across China, industrial structure and the development between urban and rural areas and among different regions remain quite unbalanced. Apart from these, we are also faced with such challenges as lack of investment in education, medical services, and social security.

The Cannikin Law argues that the greatness of a nation would not be recognised if there are definite weaknesses in certain aspects. Although China boasts a large economy and moderately prosperous society, its development is indeed constrained by a number of weak links.

The Chinese Premier Wen Jiabao once said, 'Since China has 1.3 billion people, any small individual problem multiplied by 1.3 billion becomes a big, big problem. And any considerable amount of financial and material resources divided by 13 billion becomes a very low per capita level, and becomes really small.' This remark vividly depicted the difficult reality that we in China must face.

Personally, I find it more reasonable and convincing, as many others do, to argue that China is a rising developing country. Both 'rising' and 'developing' describe an ongoing process, suggesting that the development of China is not a one off task.

The remarkable achievements we have made in economic and social development have not changed the fact that we are still a developing country. And being a developing country provides us time, room and potential for further growth. As we narrow our gap with the rest of the world, we will also contribute, through our own development, to healthy global economic growth.

What China pursues is peaceful and open development of cooperation and win-win progress. China will not seek development at the cost of other's interests. Our approach is to make the cake bigger and bring more development opportunities to the whole world.

Though a developing country, China will not walk away from its international obligations commensurate to its capability, and we will continue to try our utmost to contribute to world peace, stability and prosperity."

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