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If China is a developing country, a dragon is a dragonfly waiting to grow wings

China is today a superpower that competes with the US for global hegemony. (Photo: Reuters)Premium
China is today a superpower that competes with the US for global hegemony. (Photo: Reuters)

  • The chief benefit, in terms of duty-free access under the Generalised System of Preferences, is not available to a country just because it calls itself developing. It is up to the country providing that duty-free access to determine whether a trading partner deserves that concession or not

At the latest trade policy review for China at the World Trade Organisation (WTO), India objected to China continuing to classify itself as a developing country. Now, the WTO does not have its own criteria for determining whether a country is developing or developed. It allows a country to decide its own classification, much as liberal societies allow people to decide what gender they belong to.

Being a developing country does not get a great deal of automatic benefits, under WTO rules. The chief benefit, in terms of duty-free access under the Generalised System of Preferences, is not available to a country just because it calls itself developing. It is up to the country providing that duty-free access to determine whether a trading partner deserves that concession or not. While there can be little doubt on India’s continuing status as a relatively low-income developing country, the United States decided, under President Trump, to withdraw GST benefits previously accorded to India.

However, there are 155 special and differential measures tailored to assist developing countries, of which the least developed countries are a subset. These fall under six baskets: seeking to expand trade opportunities, seeking to safeguard the interests of developing countries, flexibility on agreements, commitments and use of policy instruments, relaxed transition time periods, technical assistance and special measures for the least developed.

The latest comprehensive trade data available is for 2020, which put China as the world’s largest exporter, accounting for 14.7% of global exports, way ahead of the US (8.1% of global exports) and Germany (7.8%). China clearly does not need any assistance to expand its trade opportunities. It has embarked on a massive belt and road programme to expand trade opportunities for itself.

Rather than China, it is China’s trading partners who need help to safeguard their interests. Sri Lanka recently saw China take over its Hambantota port, because it fell into China’s debt trap. Using the massive foreign exchange surpluses it has built up (China’s foreign exchange reserves are $3.4 trillion, 2.42 times as much as that of the reserves of Japan, the country with the second-largest reserves), China extends massive loans to developing countries that have no hope in hell of repaying them and takes over vital assets when the inevitable debt servicing default happens.

Does such an economically powerful nation need flexibility on agreements or relaxed transition periods? The final area of developing country concession is technical assistance. Which country in the world is today in a position to extend technical assistance to China? It publishes more patents than any country other than the US. It leads the world in quantum communications, is probably on par with the US in quantum computing and assorted space technologies. In hypersonic missile technology, it beats the US as well. Only in the manufacture of advanced semiconductor chips does China lag any other part of the world. And that is not going to be met by any technical assistance.

China is today a superpower that competes with the US for global hegemony. It has landed a craft on the dark side of the moon, retrieved moonrocks, shot down a satellite, perfected facial recognition software, has cornered the world’s supplies of rare earths and a goodly chunk of lithium and cobalt. It has the world’s largest naval fleet and is rapidly expanding all other wings of the People’s Liberation Army: the Air Force and assorted infantry and artillery forces, the Rocket Force and the Strategic Support Force, which houses cyber warfare capability and all emerging technologies and dirty tricks.

China’s per capita income is $10,435, qualifying it as an upper middle-income country. Incomes above $12,496 make countries eligible to enter the rich country club. But that is a technical classification based on income alone. A country’s status, in relation to other countries of the world, is not determined by income alone. For China to continue to claim developing country status is nothing short of absurd.

 

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