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Why China's "Developing Country" Status Becomes a Question

Dec 06,2011

By Liu Shijin, Zhang Junkuo, Hou Yongzhi & Zhuo Xian, Task Force on "China's Level of Development at the Present Stage", Leading Party Group & Department of Development Strategy and Regional Economy of DRC

Research Report No 71, 2011

The term "developing country" refers to a country that has relatively low levels of economic and social development and people's living standard and is still in the process of transforming from traditional agricultural society to modern industrial society. Since China began reform and opening up, its economy has been growing at an average annual rate of nearly 10% and its tremendous achievements in economic and social development have attracted worldwide attention. But China remains a developing country either in terms of the internationally acceptable per capita development indicators or in terms of the state of its economic and social structures. Then why has this simple fact that China remains a developing country become a question in the world? Why have some organizations and individuals often questioned China's "developing country" status consciously or unconsciously and even asked China to assume international responsibilities as a developed country? The latest statistical data indicate that in terms of the gross domestic product (GDP), China overtook Japan in 2010 to become the world's second largest economy. At the recent annual conference of the Davos World Economic Forum, some people suggested China's labels as "a developing country and an emerging market" be removed. In face of this situation, we need to explain why China remains a developing country and at the same time study why China's "developing country" status has become a question. A convincing answer to this question will not only help remove the international community's misunderstanding of the present stage of China's economic development but also help us correctly understand our own national conditions and pursue a realistic development strategy.

I. Lack of Equal Rights Awareness Prompts Some People to Ignore Objective Reality That China's Per Capita Levels Are Low

The true level of a country's development is mainly measured by its per capita levels, instead of its GDP. Thanks to the rapid growth in the 60 years after the founding of new China and especially in the 30 years after China began reform and opening up, the country's GDP reached 5.9 trillion dollars in 2010. If measured by GDP, China is already the world's second largest economy. But when this GDP is divided by 1.3 billion people, the level of China's development will be far lower than that of developed countries. This is a striking feature of a developing country. According to the World Bank data, China's per capita GDP was only 3,744 dollars in 2009, which was less than half of the world average level of 8,594 dollars and ranked 106th in the world1. This level was less than one-tenth of the United States (46,000 dollars), Japan (39,000 dollars) and other developed countries. If measured by per capita material consumption, China's per capita power consumption in 2007 was 2,332 KWHs, which was 514 KWHs lower than the world average level. The power consumed by five Chinese is even less than that consumed by one American (13,000 KWHs). Also in 2007, auto possession by per 1,000 people was respectively 820 for the United States and 595 for Japan. The world average figure was 182. But China's auto possession by per 1,000 people was only 49 in 2009.

The Engle Coefficient is a universally accepted indicator to reflect the quality of the people's life. The higher the coefficient is, the lower the living standard is, and vice versa. China's Engle Coefficient is far higher than that of developed countries (Table 1). This indicates that the Chinese still have to use a considerable proportion of their spending to meet their food, clothing and other basic needs. On the other hand, they spend much less on cultural, health, leisure and tourist consumption than the people in developed countries. Even if measured by the ratio of population having access to clean water, which is a basic living indicator, China's 89% level is not only far lower than in developed countries but also lower than in Brazil, South Africa and other developing countries (Table 1). So in terms of living standard, China is also undoubtedly a typical developing country.

Per capita indicators can better reflect the real state of the life and development of the people in a country. This is a general knowledge. Then why have some Westerners ignored this rule and instead made a rumpus about China's GDP?

First, these people do not really care in their subconsciousness about the state of the life of each and every Chinese. They often talk about human rights, but they take them more as a political tool for publicity or accusation so as to serve specific interests. The state of the human rights of the Chinese people is manifested in the state of the life and development of each and every one of the 1.3 billion Chinese people. If these people truly care about the state of the human rights of the Chinese people, they would not ignore the per capita indicators that can best reflect the state of the life and development of the Chinese people and should not challenge China's "developing country" status by citing China's GDP rather than its per capita indicators.

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1 According to the World Bank report, China's per capita GDP in 2009 ranked 95th in the world. If the countries that failed to publish relevant data for 11 months in the years but have higher income levels than China, China's accurate ranking should be the 106th.