WTO Says, China is a Developing Country: Relevance
- GS 2: Important International institutions, agencies and fora – their structure, mandate.
China is a Developing Country: Context
- Recently, World Trade Organization (WTO) has tagged China with a ‘developing country’ status, which has become an issue of contention for various countries.
WTO Says, China is a Developing Country: Issue of contention
- Countries are arguing that China, being upper-middle income nation is deriving benefits reserved for developing countries under WTO norms.
- Also, countries have also raised objection with the ‘least developing country’ (LDC) status to Bangladesh, which has surpassed India in terms of per capita GDP.
Benefits to the ‘developing country’
- Special and Differential Treatments: WTO grants developing countries longer timeframe to abide by the WTO agreements and even commitments to raise trading opportunities for such countries.
- Lenient targets: WTO aims to reduce government subsidies to certain industries to ensure free and fair trade. Developing countries, however, are given lenient targets and they are granted more time to achieve such targets.
- Preferential treatment: Differential classification also allows other countries to
How is ‘developing country’ tag decided?
- WTO has not defined ‘developed’ or ‘developing’ country, so a country is free to recognise themselves whether they are ‘developed’ or developing’.
WTO Says, China is a Developing Country: Why some countries are raising objections?
- Per capita income: According to the World Bank, China’s per capita income was $10,435 in 2020, much above than India whose per capita income stands at $1,928. Various countries have argued that China has become an upper-middle income country and it must relinquish its developing country status.
- Unfair trade practices: China is often accused of unfair trade practices like preferential treatment for state enterprises, dumping in other countries, data restrictions and inadequate enforcements of intellectual property rights.
- Demand of countries: Owing to these regions, countries have called that either China refrain from doing such unethical practices or forego its ‘developing country’ tag.
How has China responded?
- China has always maintained that it is the ‘world’s largest developing economy’.
- It has recently indicated that it is ready to forego all the benefits and exemptions that are available to a developing country.
- WTO recognises LDCs on the basis of a UN classification, which is reviewed every three years.
- LDC benefits: Zero duty, zero quota access for almost all exports to European Union (EU). LDC countries also enjoys exemption from certain provision of WTO agreements.
- Bangladesh is set to promote from the LDC status in 2026, owing to its GDP performance.