U.S. House lawmakers have unanimously voted to revoke China’s “developing country” status. China experts believe that the passage of this bill will make it difficult for the Chinese Communist Party (CCP) to continue its deceitful trade practices in the international community.
On March 27, the U.S. House of Representatives passed a bill to end China’s status as a developing country by a vote of 415–0. The bill would require the U.S. Department of State to influence international organizations to include China as a high-income, upper-middle-income, or developed country and to suspend the special treatment China has enjoyed as a developing country in various international organizations.
Young Kim, chairwoman of the House Foreign Affairs Subcommittee on the Indo-Pacific, is one of the bill’s sponsors. Kim pointed out that China is the second-largest economy in the world, accounting for 18.6 percent of the global economy, second only to the United States, and that the United States is considered a developed country, and so should China.
She also criticized the CCP for using China’s status as a developing country to “game the system,” depriving countries that need help accessing resources.
CCP’s Deceitful Practices
Li Yuanhua, a former professor at Capital Normal University, said in an interview with The Epoch Times on March 31 that the bill’s passage would make it difficult for the CCP to use its “developing country” status to cheat on international organizations and obtain loans or aid money.“I think the world might get to know the true nature of CCP again. The CCP has been cheating international organizations in the name of a developing country. It has been using shady methods to corrupt these international organizations to reap profits from them,” Li said.
The United States has taken the lead, and Li hopes the rest of the world will follow suit.
“After this bill is passed, we shall see that the CCP cannot just take profits without doing its due responsibilities. It will not be able to do whatever it wants as it did in the past,” he said.
“The U.S. is actually forcing the CCP to play by international rules. As a rogue regime, it is impossible for it to follow the rules, but I think it will have fewer and fewer opportunities to do so. This will actually kill the CCP’s ambition to dominate the world and use violence and money to control the world.”
Li pointed out that the CCP has always used deception to achieve its goals, including the lure of profit and fake promises.
If other countries recognize the CCP for what it is and stop falling for its deceptions, life will get more challenging for the CCP, and its rogue regime will have no room to play, he said.
Frank Tian Xie, Ph.D., a John M. Olin Palmetto Chair business professor and marketing professor at the University of South Carolina Aiken, told The Epoch Times on March 31 that if China’s status as a developing country is revoked, many of the preferential policies, loans, and aid that China has enjoyed will be terminated.
In addition, many international treaties have exemptions for developing countries. Losing the status of a “developing country” means that Beijing will be required to assume the obligations required by international treaties like all other countries.
Xie also noted that while members of the U.S. Congress are typically divided along partisan lines, there has been a remarkable bipartisan consensus on the issue of how the U.S. government should tackle the CCP.
20 Years of WTO Membership
In 1979, when communist China and the United States formally established diplomatic relations, the two countries signed a trade relations agreement in Beijing, granting each other most-favored-nation (MFN) status starting in February 1980.However, at that time, China’s MFN status must be renewed each year by the U.S. president, and Congress could override the president’s extension of MFN by passing a joint resolution of disapproval.
Years later, despite the 1989 Tiananmen Square massacre, in May 1994, then-U.S. President Bill Clinton announced the continuation of MFN status for China and the separation of trade from human rights issues. Furthermore, in October 2000, during his second term in office, Clinton signed into law a bill granting permanent normal trade relations to China, which ended the annual review of China’s human rights record by the U.S. Congress and paved the way for China’s accession to the WTO.
On Dec. 11, 2001, China officially joined the World Trade Organization (WTO). This is one of the most significant geopolitical events in the world since the Cold War. The accession to the WTO boosted China’s economic status, and it quickly became the “world’s factory” by taking advantage of the country’s cheap labor.
China’s share of the world economy climbed from 4 percent in 2001 to 18.5 percent by 2021. According to official figures, China’s GDP ranking overtook that of the United Kingdom in 2006, surpassed that of Germany in 2007, and surpassed that of Japan in 2010, eventually becoming the world’s second-largest economy.
However, the CCP has not kept its promises upon joining the WTO.
“But all too often, one step forward has been met with two steps backward, as China has erected new, often behind-the-border non-tariff barriers (NTBs) to more than compensate for concessions elsewhere. These have more than offset China’s apparent concessions,” the report stated.
“In many other cases—such as its practice of limiting market access or conditioning access on the transfer of technology or intellectual property, or its ongoing subsidies for state-owned enterprises (SOEs) and export industries—China has simply failed to fully comply with its WTO accession commitments and membership requirements.”
A WTO Loophole
WTO does not have a clear definition of “developed” and “developing” countries and allows its members to determine their own status based on their economic development. Whether China is a developed or developing country has been a topic of debate as different parties have varying opinions, but most agree that this is a loophole in the WTO rules.The most significant difference between the two statuses is that developing countries are granted special and differential treatment within the WTO framework, including relaxed trade subsidy restrictions, flexibility in using economic and commercial policy tools, extended transition periods, and provision of technical assistance to member developing countries.
Developing countries often act in concert to protect or maximize their interests when casting votes within the WTO, as they hold a higher proportion of membership and decision-making power.
In December 2017, then-U.S. Trade Representative Robert Lighthizer expressed the need to clarify the definitions of “developed” or “developing” within the WTO framework. Lighthizer noted that the United States could not continue with a situation where new regulations only apply to a few countries while others can evade the rules by self-identifying as developing countries.
“There is something wrong, in our view, when five of the six richest countries in the world presently claim developing country status,” he said. “Indeed, we should all be troubled that so many Members appear to believe that they would be better off with exemptions to the rules. If in the opinion of a vast majority of Members playing by current WTO rules makes it harder to achieve economic growth, then clearly serious reflection is needed.”
