The Billion Dollar Controversy: Is China a Developing Country?
Created: 12/20/2022 11:12 am
By: Christiane Kuehl
Skyline of Shanghai: China's metropolises are extremely modern.
But in many villages in the hinterland, poverty still prevails.
© Johannes Eisele/afp
It's about billions: China defines itself on the world stage as a developing country.
This means that Beijing is entitled to preferential treatment in world trade or in climate protection.
Dissatisfaction with this grows.
Beijing/Frankfurt – Is China a developing country or not?
This question was the last topic at the world climate conference COP27 in Egypt.
Because it's about a lot of money.
Developing countries are entitled to privileges in climate protection that save them a lot of money.
Above all, they can allow themselves more time for their climate goals.
In the jargon of the United Nations, this concept is referred to as “common but differentiated responsibility”.
When it comes to climate protection, this means that rich countries must make a bigger contribution based on the polluter pays principle.
Because they have been emitting much more greenhouse gases into the atmosphere for much longer than poorer countries.
China's economy has grown rapidly in recent decades;
Due to its size, the country is now the largest CO2 emitter in the world.
And yet China stoically insists on its status as a developing country - in order to have as little responsibility as possible, as critics complain.
Many international organizations still classify China as a developing or emerging country, including the International Monetary Fund (IMF).
But the debate about this is also taking place, for example, in the World Trade Organization WTO – which also grants privileges to developing countries.
Developing country debate about China in many international organizations
The question worth billions at the COP27 in November was how poor countries should be compensated for the climate damage that industrialized countries in particular cause through their emissions.
As early as 2009, the rich countries pledged 100 billion US dollars a year for this.
This sum has not come together in a single year;
In 2021 it was a good 83 billion.
This does not reflect well on Europe and the US.
But China also stubbornly refuses to participate in the payments.
The People's Republic is also catching up in terms of per capita CO2 emissions.
On average, every person in China emits around seven tons of CO2 per year, said the well-known climate expert Mojib Latif recently at the annual China Time conference in Hamburg.
Germans emit nine tons per capita per year, Indians only two tons.
As output grows, acceptance of China's stance is shrinking – as COP27 showed.
There, the EU proposed setting up a fund from which the poorest countries should be compensated for climate damage – which is ultimately caused by the big emitters such as the USA and Europe.
The EU proposal, however, wanted to extend the donor countries to China and the rich Gulf States.
Already at the beginning of the COP27, the chairman of the Aosis group of endangered, mostly poor island states, Gaston Browne, had demanded that China should also participate in the financing of climate policy in the future.
China's negotiator Xie Zhenhua, on the other hand, quickly made it clear that China did like the fund but would not participate financially.
A heated debate lasting several days ensued.
In the end, the COP27 approved the fund, but postponed the decision on the contributors to the COP28 in Dubai 2023.
China's delegation was dissatisfied with this result, according to delegation circles.
You could have guessed that something was going on.
Debate on China's status also at the World Trade Organization WTO
The debate in the World Trade Organization (WTO) began a few years ago when then US President Donald Trump accused China of deliberately presenting itself as a developing country in the organization.
The country wants to achieve trade advantages in an unfair way.
Benefits reserved for developing countries under WTO norms include longer deadlines for implementing agreements, which typically aim to reduce state support for certain sectors of the economy.
However, government funding of strategically important sectors is the order of the day in China.
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The problem: There are no definitions for this status in the WTO.
The member countries themselves define whether they are “developed” or “developing countries”.
As a result, even the now fairly prosperous South Korea successfully claimed developing country status by 2020.
The USA wanted to put an end to this and proposed in 2019 to abolish self-declaration and introduce binding rules.
Accordingly, those states should be excluded from the special treatment that meet at least one of the following criteria:
Classification as a high-income country by the World Bank,
Membership of the OECD or G20,
or a share of over 0.5 percent in world trade.
China already met two criteria back then: It is in the G20 and has a higher share of world trade.
Beijing, of course, rejected the proposal.
To date, the problem of self-definition has not been solved;
the WTO has long been paralyzed by disputes on various issues and is currently hardly able to bring about reform.
China is sitting out the WTO discussion for the time being.
China is an “upper middle income” country
But what is China really?
The World Bank divides the world's economies into four income brackets - low, lower-middle, upper-middle and high-income.
China is therefore an upper-middle-income country, along with countries such as Turkey, Brazil, Argentina and Mexico.
In addition, the People's Republic is on the threshold of "high income".
The World Bank assessed this limit on the reporting date in July 2022 at a per capita income of 13,205 US dollars.
According to the World Bank, China’s per capita income in 2021 was just under US$ 12,556.
For comparison: the value was 2,277 US dollars in India, 4,292 US dollars in the emerging country of Indonesia – and 50,802 US dollars in wealthy Germany.
The per capita income on China's coast is now about as high as in Portugal, said Jörg Wuttke, President of the EU Chamber of Commerce in China, at the Hamburg China Time conference.
But the People's Republic is just as huge as a continent, with huge differences in income.
China always uses these enormous social and regional inequalities as an argument for its status.
So is China, as former WTO director Pascal Lamy once put it, “a rich country with many poor or a poor country with many rich”?
China: Out for developing country status could be expensive
The fact that poorer countries demanded money from China for the first time at the COP27 poses problems for Beijing.
"The difficult part for China will be maintaining its stance without damaging its credibility with developing countries," Beijing think-tank Trivium Netzero commented after COP27.
It was very important that the decision to have a compensation fund only for the poorest countries caused "a crack in the wall between industrialized and developing countries," said Jennifer Morgan, Secretary of State for Climate Change at the Federal Foreign Office, after COP27 to the
Frankfurter Rundschau of IPPEN.MEDIA
.
“That alone made it worth doing.” The boundaries are beginning to blur.
Beijing, on the other hand, repeatedly points out that it was the West that was able to build its wealth on fossil fuels with impunity for over a century.
That's not wrong.
It is also true that some of China's emissions come from factories that make products for Europe and America.
These are the largest cities in China
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China does not want to be held accountable, but it is committed.
Trivium analysts expect China to offer more voluntary, direct climate aid via so-called South-South cooperation.
Beijing has already promised that.
Because the People's Republic benefits from good relations with developing countries.
And if it pulls the trigger itself, China can also act constructively multilaterally, as at the COP15 species protection conference that recently ended under the Chinese presidency.
Head of state Xi Jinping had previously announced a global species protection fund, to which China also wanted to contribute.
And at the end of the COP15 in Montreal, the Chinese negotiator, Environment Minister Huang Runqiu, pushed through the final agreement on Monday against the opposition of several developing countries.
This came as a real surprise to many observers.
