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US legislators strip China of 'developing nation' status

Bill passes House of Representatives unanimously

Analysis | Asia-Pacific

As signs of a new Cold War are fast emerging at the United Nations, the US continues its war of words with the People’s Republic of China (PRC).

The rivalry, which extends from Russia and Taiwan to Iran and Myanmar – where the UN’s two permanent members are on opposite sides of ongoing political or military conflicts– has now triggered a battle on semantics.

Is China, described as the world’s second largest economy ranking next to the US, really a “developing nation”?

The U.S. House of Representatives unanimously passed a bill March 27 directing the Secretary of State Antony Blinken to strip the PRC of its “developing country” status in international organizations.

Titled “PRC Is Not a Developing Country Act” — the bill cleared the House in an overwhelming 415-0 vote. The legislation reads: “It should be the policy of the United States—

(1) to oppose the labeling or treatment of the People’s Republic of China as a developing country in any treaty or other international agreement to which the United States is a party;

(2) to oppose the labeling or treatment of the People’s Republic of China as a developing country in each international organization of which the United States is a member; and

(3) to pursue the labeling or treatment of the People’s Republic of China as an upper middle-income country, high income country, or developed country in each international organization of which the United States is a member”.

At the United Nations, China is closely allied with the 137-member Group of 77 (G77), the largest single coalition of “developing countries” (a group created in 1964 with 77 members).

Since China is not a formal member of the G77, the group describes itself either as “The G77 and China” or “The G77 plus China.”

Ambassador Anwarul K. Chowdhury, a former Permanent Representative of Bangladesh to the UN and a former UN Under-Secretary-General, told IPS the defining of a developing country is a complex challenge.

“There is no established framework or charter for defining a “developing country,” he noted

According to well-respected economist Jeffrey Sachs, the current divide between the developed and developing world is largely a phenomenon of the 20th century. Some economists emphasize that the binary labeling of countries is “neither descriptive nor explanatory”.

For the UN system, the G77, which provides the collective negotiating platform of the countries of the South, is in reality synonymous with nations which are identified as “developing countries, least developed countries (LDCs), landlocked developing countries and small island developing states” (SIDS).

“They are all sub-groupings of developing countries and belong to the G-77, he pointed out.

Outlining the group’s history, he said, the G-77 was established in 1964 by seventy-seven developing countries, signatories of the “Joint Declaration” issued at the end of the first session of the UN Conference on Trade and Development (UNCTAD) in Geneva.

Although members of the G-77 have increased to 134 countries, the original name was retained due to its historic significance. Developing countries tend to have some characteristics in common, often due to their histories or geographies, said Ambassador Chowdhury, Chairman of the Administrative and Budgetary Committee (Fifth Committee) of the UN General Assembly in 1997-98 and Chair of the Group of 27, working group of G-77, in 1982-83.

In October 1997, he said, China joined the G-77 while keeping its special identity by proposing the nomenclature as “G-77 and China”. China aligns its positions on the global economic and social issues with G-77 positions for negotiating purposes.

Being the largest negotiating group in the United Nations, and in view of the mutuality of their common concerns, G-77 is not expected to agree to separate China from the current collaborative arrangements.

“And more so, if the pressure comes from the US delegation, in view of the recent resolution of the House of Representatives of the US Congress, to take away the categorization of China as a developing country”, declared Ambassador Chowdhury.

In a World Bank Data Blog, Tariq Khokhar, Global Data Editor & Senior Data Scientist and Umar Serajuddin, Manager, Development Data Group, at the World Bank, point out that the IMF, in the “World Economic Outlook (WEO)” currently classify 37 countries as “Advanced Economies” and all others are considered “Emerging Market and Developing Economies” according to the WEO Statistical Annex.”

The institution notes that “this classification is not based on strict criteria, economic or otherwise” and that it’s done in order to “facilitate analysis by providing a reasonably meaningful method of organizing data.”

The United Nations has no formal definition of developing countries, but still uses the term for monitoring purposes and classifies as many as 159 countries as developing, the authors argue.

Under the UN’s current classification, all of Europe and Northern America along with Japan, Australia and New Zealand are classified as developed regions, and all other regions are developing.

The UN maintains a list of “Least Developed Countries” which are defined by accounting for GNI per capita as well as measures of human capital and economic vulnerability.

“While we can’t find the first instance of “developing world” being used, what it colloquially refers to — the group of countries that fare relatively and similarly poorly in social and economic measures — hasn’t been consistently or precisely defined, and this “definition” hasn’t been updated.”

“The World Bank has for many years referred to “low and middle income countries” as “developing countries” for convenience in publications, but even if this definition was reasonable in the past, it’s worth asking if it has remained so and if a more granular definition is warranted.”

In its legislation, the US House of Representatives says “not later than 180 days after the date of the enactment of this Act, the Secretary of State shall submit to the appropriate committees of Congress a report identifying all current treaty negotiations in which—

(a) Any international organization of which the United States and the People’s Republic of China are both current member states, the Secretary, in coordination with the heads of other Federal agencies and departments as needed, shall pursue—

(1) changing the status of the People’s Republic of China from developing country to upper middle income country, high income country, or developed country if a mechanism exists in such organization to make such a change in status;

(2) proposing the development of a mechanism described in paragraph (1) to change the status of the People’s Republic of China in such organization from developing country to developed country; or

(3) regardless of efforts made pursuant to paragraphs (1) and (2), working to ensure that the People’s Republic of China does not receive preferential treatment or assistance within the organization as a result of it having the status of a developing country.

(b) The President may waive the application of subsection (a) with respect to any international organization if the President notifies the appropriate committees of Congress, not later than 10 days before the date on which the waiver shall take effect, that such a waiver is in the national interests of the United States.

Speaking during the debate, Representative Young Kim (Republican of California) said: “The People’s Republic of China is the world’s second largest economy, accounting for 18.6 percent of the global economy.”

“Their economy is second only to that of the United States. The United States is treated as a developed country, so should PRC,” Kim said. “And is also treated as a high-income country in treaties and international organizations, so China should also be treated as a developed country.”

“However, the PRC is classified as a developing country, and they’re using this status to game the system and hurt countries that are truly in need,” she added.

Elaborating further, Ambassador Chowdhury said the World Bank, as a part of the Bretton Woods institutions, classifies the world’s economies into four groups, based on gross national income per capita: high, upper-middle, lower-middle, and low income countries.

In 2015, the World Bank declared that the “developing/developed world categorization” had become less relevant and that they will phase out the use of that descriptor.

Instead, their reports will present data aggregations for regions and income groups.

The World Trade Organisation (WTO) accepts any country’s claim of itself being “developing”.

He said certain countries that have become “developed” in the last 20 years by almost all economic metrics, still wants to be classified as “developing country”, as it entitles them to a preferential treatment at the WTO – countries such as Brunei, KuwaitQatarSingapore, and the United Arab Emirates.

The term “Global South“, used by some as an alternative term to developing countries, began to be mentioned more widely since about 2004.

The Global South refers to these countries’ interconnected histories of colonialismneo-imperialism, and differential economic and social change through which large inequalities in living standards, life expectancy, and access to resources are maintained.

“Most of humanity resides in the Global South,” declared Ambassador Chowdhury.

This piece has been republished with permissionfromInter Press Service

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