Todd Bishop
The 74th UN General Assembly closed on September 30. During the meeting, Chinese State Councilor and Foreign Minister Wang Yi made many remarks on China’s foreign policy and its position in the world.
On September 24, Wang Yi said in a speech to the United Nations that China does not have a “gene called the king’s dominance” and “does not intend to play “power games” on the international stage.” He also acknowledged that the United States is still the country with the strongest overall national strength in the world at a time that is predictable to date. He said: “Our per capita national income, human development index and the level of science and technology education are still far from the United States.”
He emphasized that China is still a developing country.
In addition to the China-US trade war, US President Donald Trump is launching another battleground – the status of China’s “developing countries.” Wang Yi’s above speech may also be a response to this.
U.S. ultimatum to the WTO
Trump made an ultimatum to the World Trade Organization (WTO) at the end of July: a request to amend a rule that would allow countries to decide whether they qualify for “developing countries.”
According to the White House’s memorandum, the United States believes that “when the richest economies demand the status of developing countries, this not only harms developed economies, but also undermines economies that really need special and differential treatment (S&D).” China, for example, shows China’s export trade volume, the growth of high-tech products, the scale of foreign direct investment, the number of Fortune 500 companies, defense spending and space strength, and how China is “developed.” “.”
On the surface, the US’s questioning seems reasonable: in the face of China, which has become the world’s second largest economy, the largest trading power, and a member of the G20, it is sighed by why it is still a developing country. There seems to be nothing wrong with it. But to get a deeper look, why should the label of “developing countries” be measured by the economic volume and the total amount of import and export data?
According to per capita national income, the average American income in 2018 is 16 times that of Indonesia, 26 times that of Vietnam, 31 times that of India, and 6.6 times that of China. The data adopted by the United States actually ignores the gap between developing country members and developed members in terms of per capita income level, technological development, economic structure, regional differences, social management, and development quality. From this perspective, it is also reasonable for these countries to enjoy differential treatment in the WTO.
Fundamentally speaking, the US appeal is not related to how the developing countries identify it, but because it judges the United States under the WTO rules. In Trump’s mouth, the United States became the “victim” of the current rules, but Trump did not mention the benefits that the United States gained from global trade in the upper reaches of the value chain. One example is the vast majority of Apple phones produced in China. Apple Inc. (Apple) still owns 58.5% of its profits. Is this also “unfair” trade for the United States? The challenge of challenging the status of developing countries is not “fair”, but a step in Trump’s unilateral trade measures.
After Trump took office, the United States is also actually challenging the status and operation of the WTO. Since 2017, the United States has been obstructing the opening and appraisal of members of the Appellate Body at the regular meeting of the WTO Dispute Settlement Mechanism. This has resulted in only three judges remaining at the Appellate Body. By December 10, 2019, the Appellate Body will have only The next judge means that the WTO will be paralyzed. At the same time, from the signing of the US-Mexico Free Trade Agreement (USMCA) to the US-European consensus on “zero tariffs”, Wright Heze has always adopted the “one-by-one” tactic. Trump has even threatened to withdraw from the WTO recently. This is another turn of the United States from multilateral organizations to unilateralism.
See “developing countries” from the framework of the rules
Discussions about whether China can still be called a “developing country” have always existed. In fact, developing countries enjoy some preferential treatments in multilateral organizations such as the United Nations and the World Trade Organization. However, China has never enjoyed 100% special and differential treatment in the WTO, and many international organizations have given preferential policies to developing countries. China has also “graduated” from it.
For example, the special and differential treatment of the WTO is about 150 in total, but there are actual differences depending on the situation of each country. China can be said to be the most special example. China’s accession to the WTO in 2002 and the signing of the “China’s WTO Accession Protocol” are quite unique in the WTO system. On the one hand, the protocol stipulates that China has to bear more “super-WTO” obligations than the developing countries and transition economies, and on the other hand requires China to accept “negative WTO” treatments lower than other developing countries. These are all China. unique.
For example, the agreement allows WTO members to implement special safeguards based on the recognition of China’s “non-market economy” entities within 15 years of China’s accession to the WTO, without unconditional MFN treatment; China’s tariff quota commitments in agriculture, automobile industry and industrial products. Higher than other developing countries; accepted the stringent requirements for establishing a transitional review mechanism; the provisions for granting national treatment to foreigners in investment activities are beyond the scope of WTO agreements; the Agreement on Trade-Related Investment Measures was abandoned for development National transitional measures, etc. It is unreasonable to look at the status of China’s “developing countries” by abandoning these unique terms for China.
Moreover, as China’s commitment to WTO accession has been basically completed, transitional measures in many developing countries are no longer applicable. As of 2010, China’s cargo tax reduction commitments have been fulfilled, and the total tariff level has dropped to 9.8%. The tariffs on the most concerned vehicles and parts have dropped to 15% and 6%, exceeding the requirements of WTO accession; Among the service trade areas, China has pledged to open up to 100 sub-sectors in nine categories, close to the average of the developed members’ commitment to open 108 sub-sectors; the central and local governments have eliminated hundreds of thousands of laws and regulations that are inconsistent with WTO rules.
Just as the transition period of the WTO has gradually ended, since 2014, China has also “graduated” from the United Nations Trade and Inclusion System (GSP) list in the EU, Canada and other countries, and no longer enjoys preferential tariffs. In 2018, the World Bank also agreed to increase interest rates on loans to China to increase China’s financing costs under pressure from the United States. In recent years, the United Kingdom, Germany, Japan and other developed countries have stopped aiding China.
It must be acknowledged that China still enjoys the special treatment that some developed countries do not have, but it also bears the obligations that other developing countries do not have to bear. For example, China’s UN membership fee will be greatly increased this year, and even for the first time, it will surpass Japan’s second contributor; it will greatly increase foreign aid through “South-South cooperation”; it will play a role in counter-terrorism, peacekeeping, and protection of international waterway security. The more the role comes. Most notably, while the United States withdrew from the Paris Agreement, China promised to achieve carbon emissions peak in 2030, and promised to meet the requirements of the Paris Agreement three years ahead of schedule, which is the majority of developing countries, and even some Developed countries are not willing to do it.
It can be seen that the labeling of developing countries does not mean that China is evading responsibility, nor does it mean that it is “unfair” to other developing countries.
According to the proposal of the US draft, the OECD member countries, the G20 member states, the high-income countries recognized by the World Bank, and the four countries with a total trade volume of more than 0.5% of the global total should not require differences in the future rounds of WTO negotiations. special treatment. According to the WTO’s Global Trade Data and Outlook, import and export data for Mexico, UAE, Brazil, Malaysia, India, Vietnam, Poland, Thailand, and Indonesia exceeded the US’s 0.5% cap in 2018. However, China is clearly the biggest target that the United States has seized. As for whether it affects other countries, the United States does not care. From this perspective, the US’s intention to contain China is even more obvious. The key to catching the “developing countries” label is still the problem that China’s rise makes the US feel uncomfortable.
Why does China adhere to the status of “developing countries”?
The Chinese Ministry of Foreign Affairs and the Ministry of Commerce have responded to the “open battlefield” of the United States. The Ministry of Foreign Affairs emphasized that the WTO is not a country or a few countries have the final say, but to respect the general wishes of all members. The Ministry of Commerce responded that the US side denied the status of developing members of some members, including China, which is neither in line with the facts nor in accordance with the principles and spirit of the WTO. Previously, 10 developing member countries including China, India, South Africa and Venezuela also submitted to the WTO Council the document “Promoting development and ensuring inclusiveness and supporting the special and differential treatment of developing countries”. Developed economies such as the United States and Europe selectively use certain economic and trade data to deny the distinction between developed and developing countries.
It can be seen that China is still very persistent in the status of developing countries. The interpretation of the outside world has always been China’s reluctance to lose the “benefit” of developing countries. It is true that China still enjoys certain benefits for the status of developing countries. For example, it reserves more room for subsidies in the WTO. It can take necessary measures to control the total level of imports due to balance of payments, and retains some important commodities. The right to import and export state-run trade management. In addition, in multilateral organizations such as UN agencies, the World Bank, and the International Monetary Fund (IMF), China has enjoyed preferential financing, trade, education, and economic assistance for many years.
However, this reason may not be all. In the cohort of developing countries, China has other ambitions besides special treatment. In 2015, Chinese President Xi Jinping attended the general debate of the UN General Assembly and delivered a speech, especially talking about the relationship between China and developing countries, and received great repercussions. Xi Jinping said: “China will continue to stand with the developing countries and firmly support the increase of the representation and voice of developing countries, especially African countries, in the international governance system. China’s vote in the United Nations will always belong to development. country.”
The vote of “forever a developing country” is not only for the protection of its own interests, but also for China’s desire to represent the developing countries at the United Nations to eliminate discriminatory policies and unfair treatment for developing countries. “Developing countries” are more politically important to China. This stems from China’s development history. It is reflected in the current background and reflects China’s desire to become a “flagman” of multipolarization and multilateralism.
How to recognize that developing countries may be a pseudo-proposition in itself, the real question is, in the economic and trade field, international governance or facing various global challenges, what kind of form should countries cooperate to cope with? The United States now hopes that it can be singled out with the threat of “retreating from the group”, and China hopes to provide new choices to the world through multilateralism. This is not only a unilateral and multilateral choice, but also involves the development rights of many countries in the future. Its influence is even more profound than the trade war.
