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Is China a developed or developing country?

Posted by: , Posted on: - Categories: China
The Shanghai skyline is testament to China's rapid growth

After 6 years of living in China, I continue to be impressed by the entrepreneurialism, energy and commitment of its people. For young, especially urban middle-class Chinese, their life experience has been overwhelmingly positive. In 1979, per capita income was estimated at $210. 30 years of often double-digit growth has increased that to $3,315 in 2008. A 26 times real increase for 1.3 billion people. The speed of such a spectacular increase has been repeated elsewhere (Hong Kong, especially South Korea after the Korea war) but never before at such a scale. Inequality has certainly increased over the period, but in 1979 everyone was equal in a fairly miserable condition.

The story is different in rural provinces like Gansu

However, all this needs to be kept into perspective. These gains average out at less than $10 per person per day. And of course, income inequality means that most people will be living on even less than that. The Prime Minister, Wen Jiabao, has a saying which is much quoted: “China is a big country. Any achievement, however large, when divided by 1.3 billion people is a very small achievement. And any problem, however small, when multiplied by 1.3 billion people, is a very large problem”. China may have the third largest economy in the world, but in per capita terms it was ranked 104 out of 179 countries by the IMF in 2008.  Conditions in cities like Beijing, Shanghai and Guangzhou are worlds away from the experience of rural Chinese living in western provinces like Gansu, Yunnan and Xinjiang.

China is clearly a powerful country. However, the suggestion of a G2 (the US and China) running the world economy is clearly exaggerated. Nevertheless, the UK needs to work closely with China to secure many of the international development objectives set out in the July White Paper, “Securing our Common future”. Some are obvious – for example, climate change, international sustainable development and reform of the international political and financial institutions. Others are less obvious – in terms of our objectives relating to conflict-affected and fragile economies, China provides the most peacekeepers of any major power (2,158 compared with 258 from the UK), and its demand for resources from countries such as the Democratic Republic of the Congo and Sudan is a potential opportunity for sustained development.

In terms of international development, the UK’s main interest in China is its engagement with international issues. David Milliband, the British Foreign Secretary, has talked of China as “becoming an indispensable power in the 21st century”.  William Hague, the shadow spokesman on foreign affairs,  has spoken of it being  “in our strategic national interest to have an effective and strong relationship with China”. However, China’s overwhelming priority is on domestic development and it has not yet devoted enough human resources within the central government to deal with the wide and increasing range of international issues on which a Chinese position is now sought. To that extent, the capacity constraint that is evident in much poorer developing countries is also evident in China.

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  1. Comment by Ian Belshaw posted on

    Thanks Adrian for the very interesting blog. I find China's changing position within the development community really intriguing. As you point out, there is still much development work needed in China to tackle poverty and inequality, but at the same time we cannot fail to notice the increasing presence of China as an emerging power, certainly within Asia, and in the wider world. As China inevitably becomes more prominant as a potential donor country, it seems crucial that organisations such as DFID are able to interact closely with them to seek common policies and approaches, a partnership of new power and older experience perhaps.

  2. Comment by Peter mmassy posted on

    China being the developed country should not guarantee the industrial supremacy but it should observe the general welfare of the citizens. Their acces to social services, economic welbeing etc.

  3. Comment by Alex posted on

    I think that modesty and wisdom of its people together with desire to work hard will make this country the strongest very soon. Personally I would love to read someting about Vietnam as well...

  4. Comment by tub-chair posted on

    I think China has to do a lot more to control quality, in order to change the perception of "pile it high" sell it cheap - some imports giving serious problems. It is interesting to contrast with how Japan dominated with quality , where China dominates on price.

  5. Comment by HSA posted on

    Although I disagree with a lot of the things China has done in the past and still is doing, I think they are a developing country.

  6. Comment by DFID and the end of its aid to China | Ipeanddevelopment's Blog posted on

    [...] tons in 2005 (same table). In fact, a DFID blogger–yes a member of the department–once quoted Premier Wen Jiabao: China is a big country. Any achievement, however large, when divided by [...]

  7. Comment by Rider i posted on

    It would seem to me that this idea that Chna is actually concentrating on their domestic policy is completely shadowed by the basic data set I will poin out.
    The US deficit spends at about 66% of its GDP. This means that is how the US is able to spread out its wealth. By taking out loans from itself to make sure its people have a common spread out welfare. However, the US account balances which represent capital inflows are the world's worst. This is mainly due the reserve countries wishing to keep their status and ability to buy internationa markets with their reserves instead of spending it on their domestic policy. This is more than blatant with China. As China could very easily spend more of their reserves on their poverty and per capita income to spread out the wealth via very basic welfare and legsilation as such we have seen in countries like Japan, Canada, and the US. However, it is China's belief that they are to afraid to spend money on their own domestic welfare. We see this as China's deficit spending is at a low of 3.8% of their GDP.

    Now we get back to the so called citation from their leaders regarding amount of human's in their country. Well then that would mean with the US at a 300 million mark of legal citizens and then China at a 1 billion mark that it is obvsious that China's domestic policy should be stronger than its international policy.

    However, again this is not true. As we have seen that China spends massively and creates unfair loans and market places for specific industries that will create unfair competition in the means of SOE Champions. Thus this is shown in data sets of loans to SOE's versus loans to private enterprises or other wise entities that produce a higher quality if life in the domestic realm by spreading out the domestic market place. As free enterprises usually concentrate on their domestic market first which means, the areas that are undeveloped become developed as those free enterprises need more market shares. As we have seen in free market doemstic quality of life creation.

    We see this hugely in the US. Were the US makes sure to give more loans to free enterprises than duopolies. This is because the US cares about is individuals first and its international domiance second. The Chinese domiance is seen to be the first and foremost strategy of their economic policy.

    This is shown as the Chinese believe that the only way they can survive is by high exports and low imporst. As China is the world's 6th highest barrier to its economy. Thust this is also shown through their SOE's strateiges which instead of following outlines and treates. They merge their SOE's to be gigantic instead of allowing their free enterprises to compete for the new market shares that the falling SOE's should have left behind. However, we find massive unfair competitive SOE's which work together in cartel movements like the car industry. Which then means the free enterprise car industries of China can't comepte fairly for the market shares of China's car industry. As such we then see the Chinese government stopping free enterprises from places like the US and other ountries from entering its domestic market place. Mainly due to the fact that it has destroyed its own domestic market and the ability to spread out its economic and quality of life through uncompetitive centralized economics.

    Were as the US and free markes, do not allow business to cartel or work together to marke share or set prices or to compete unfairly agaings international or domestic compeition. Thus we then see the accumlation of an actual country that does not concentrateon their domestic marke place or even their own quality of life yet places more emphase on international domiance than domestic quality of life. As a great cold warrior stated. The Communist wish for international dominace. Were the Free markets wish for individual quality of life. The Communist work for the governments needs while free markets work for the individuals needs. This then allows communist markets to be stronger and scarier in competition as they are unfairly strategized to win at all costs, including constant recpatalization or even mergers of falling SOE's for their market shares to bigger SOE's to create champion SOE's. Were we see the free markets concentrate more on entreupernuership and free enterprises.

    Thus through China's deficit spending, its massive trade surplus, its unfair loans to non domestic quality creation and a list of other things. I would have to say that you my friend are wrong. It is in China's best interest to stay a developing country. They will do this until they believe that they have enough of the international market shares so as to create a domiance for China. Were as free markets just wish for fair competition, Communsit wish for single domiance through unfair play. This is a truth and has been known for some time. From politics to economics Communsit wish for domiance not for fair play or competition.

    Rider i

  8. Comment by Rider i posted on

    I would just like to say. For a country that claims to be for the Commune. They really spend more on aquisition than they do on their own people. Which means they are centralizing the world's wealth and market shares, while not sharing it properly with their own people through deficit spending and loans to free enterprises. Which inherently create a higher quality of life as natural law means those entities have to go out and find business and will then create it by mere natural law of economics. However, SOE's and centralized strategies are basically for government dominace and not for domestic quality of life or spreading of welfare. As they centralized the wealth and create huge disparties.

    Rider i

  9. Comment by shreya posted on

    china as shown in television and discovery related channels has been portrayed as a developed nation......its vast improvements in all fields and economic activities, its rise in the % of international trade shows that it is a fast developing nation........after reading all the sites and pages related to this topic i feel that it can be grouped under a developing nation........for as per the nations prime minister a huge population is the root cause of china not being grouped under developed countries.........its good in all fields only population if controlled it may rise as the most powerful developed nation.........

  10. Comment by Vitalka posted on

    The Chinese Prime Minister, Wen Jiabao spoke a very serious words about "small achievement and big problem" when applying to the whole nation. Yes, deep regions of China are more likely very bad financial situation and prospective trade provinces - isn't the whole China.
    Even being the "largest factory in the world", China should have a very smart view on their future, on political, financial and industrial growth. The good thing is that many factory owners little-by-little are changing their minds, understanding that high quality China products will give them more orders than low quality products. When they have satisfied clients (many of those are very popular and respectful persons in their countries) - it's also has a great influence on attitude towards China.
    I am personally believe that China go into very strong level of international influence and if they be accurate with new developments - this nation become on of the most important on the planet.

  11. Comment by Rider I posted on

    Well Vitalka that is the problem. The fact that the Communist Chinese governmetn still uses very many old Bolshevekian style intellegence protections for their economics. Which means now that the Communist have out down the free world in such industries as pretty much all of them they will easily be able to out due them in higher named products. That is pretty much what the Communist Intellegence Units of SASAC and MSS are working on right now. They are trying to create massive uncompetitive SOE's to create internatioanl branding of not Chinese products or Chinese free enterprises by of Chinese Communist government owned enterprises. This is easily seen by the latest political legal battle in China. Where the Communist Chinese governemnt sent someone to jail for gathering information on which the free world corporations and researchers like me already had via $300 frame pictures as per free world corporations. It is a matter of the Communist not properly spreading their wealth around their country and allowing proper fair comeptition for all to trade in their country via free enterprises like other countries do. Then again who can blame them the Communist think the free world crashed the economy when at basic investigation would show via economics if you look at the person with the most after the crash that is usually the entity that caused it.