China: home of shiny high-speed trains,
and gleaming skyscrapers,
and...
also, really poor people.
So is China a rich developed country or still developing country
I mean potato potato, does it even matter what you call it?
Well as it turns out, yes!
Welcome back to China Uncensored. I'm Chris Chappell
International trade what a beautiful thing!
Thanks to it. We enjoy
exotic products like bananas or coffee or Raisinets.
Or everyday low prices at Walmart
as long as you don't think too hard about where those low prices come from
But behind the scenes
international trade is a competitive game.
Think of it like mixed martial arts
You know, everyone has their different styles of trading.
This guy definitely seems like a protectionist.
And though it may not always seem like it,
there are rules you have to follow
like no biting or eye gouging.
Who makes the rules?
Well in MMA
it's the UFC.
And if you break the rules in the ring, there are consequences.
In international trade, there's no UFC, but there is the WTO or the World Trade Organization.
Like an octagon where bureaucrats in suits thrash out their differences on trade issues
Unfortunately. they actually do it seated at conference tables and not in the Octagon.
I would pay to watch that, though.
But settling disputes about whether countries are playing by the rules isn't the only thing the WTO does.
Its main function is to ensure that trade flows as smoothly predictably and freely as possible.
And besides settling disputes and reducing trade tensions it also helps poor countries develop,
and gives the weaker countries a stronger voice
That means weaker or developing countries get preferential treatment.
Imagine a UFC match where the weaker opponent gets all kinds of handicaps.
For example,
He's allowed to occasionally eye gouge you.
President Trump,
who's an expert at complaining about things on Twitter, put it this way:
China is a great economic power?
but it's considered a developing nation by the WTO.
They therefore get tremendous perks and advantages.
That's essentially true.
According to the WTO
there are special provisions
Which give developing countries special rights.
And for the Chinese government being able to claim
developing country status has been a pretty sweet deal.
Like in the area of government procurement.
When the Chinese government buys stuff it's allowed to
discriminate against foreign companies by favoring higher priced and lower quality
domestic providers over lower priced and higher quality foreign providers.
The US government is not allowed to do that and
developed countries like the US are supposed to give developing countries special breaks
like setting low tariffs on goods from developing countries.
But developing countries can set high tariffs on goods from developed countries.
That means for example that US companies have a harder time selling their stuff in China
The WTO also encourages developed countries like the U.S.
to share technology with developing countries.
What's called technology transfer.
That doesn't mean China is allowed to just steal intellectual property.
But it does mean the WTO often turns a blind eye to it.
So basically when China steps into the Octagon against the US or Europe the WTO refs
Let China wear body armor and they look the other way when China gets in one of those eye gouges.
Some of these WTO advantages really do make sense for developing countries like Jamaica.
It would be unfair if big foreign companies came in and just totally dominate that Jamaican economy.
To make it ought to be given the time to develop its own industries like sugar and coffee and Bob Marley.
But China's economy is a thousand times bigger.
In fact, China's economy is larger than the economy of every single developed country except the US
So does it still make sense to treat China as a developing country?
Well guess what: it's complicated.
When China started applying to join the WTO back in 1986, it was poor.
the average gross domestic product or GDP was about
$700 per person per year
Compare that to nineteen thousand per person for the U.S. at the time.
But that's all changed.
According to the International Monetary Fund
China's per capita GDP is now 25 times bigger
So China's developed now, right?
Well, not exactly...
Jeremy Wallace a professor at Cornell University says China is complicated.
In many ways China is both a developed and a developing country.
The vast majority of Chinese people are poor and yet because China is such a huge country
it is still the case that there are a huge number of rich people in China.
In fact, there are kind of more rich people in China than there are
people in the United Kingdom
Bjorn Conrad vice president of the Mercator Institute for China studies breaks it down like this:
It's a...
developed country if you look at number of Starbucks or
literacy rate.
It's a developing country if you look at the numbers of doctors per capita or
percentage of the workforce that works in agriculture
Okay, China, has lots of Starbucks, but not enough doctors.
So is China developing or developed?
Since the WTO gives certain advantages only to developing countries,
surely the WTO has a strict set of criteria to make this distinction, right?
Turns out, nope, the WTO has no official definition
Members announce for themselves whether they are developed or developing countries.
Which is like letting each UFC fighter decide for themselves whether they're allowed to eye gouge their opponent.
And which do you think that Chinese Communist Party chose?
Since it joined the WTO in 2001, it's been calling China a developing nation, and it's gotten all the cool perks.
China was the world's fifth biggest economy back then but within a decade it has pulled into second place.
Now the US and Europe are both calling, China out,
Arguing it's a big enough player that it has to start playing by the rules of developed countries
But the Chinese authorities are pretty sure that China is still developing
So what do you think about the preferential treatment at the World Trade Organization?
Is it time China got a status upgrade?
Leave your comments below.
Once again, I'm Chris Chappell. See you next time
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