Why India should object to China being bracketed as a developing country

India needs to take the lead in ensuring that the term 'developing country' is defined to exclude China

Is the People’s Republic of China (PRC) still a developing country? This is a question that will increasingly be asked going forward, and it is one on which the Indian government must swiftly have a position. 

The answer, in many ways, seems automatic. The PRC is now an aspirant superpower. It is one of the top two economies in the world; at gross domestic product per capita, that has likely already passed $10,000, it is now or will shortly be above the median world per capita income. Within four years, it will almost certainly be defined as an upper-income country by the World Bank. The government in Beijing is powerful and well-funded. Indeed, its cash pile is the envy of the world. Its massive reserves can be easily used to cushion domestic crises and to finance the forays of its infrastructure and other companies abroad. Increasingly, its problems are those of a richer country: Managing its transition to a more innovative growth path; controlling its carbon emissions rather than expanding its electricity distribution network; improving urban quality of life; and re-aligning foreign and trade policy to its new status and its dense web of interdependencies. 

But this is not how the leaders in Beijing see it. They are insistent that the PRC continues to be seen as a developing country, with the problems and thus the opportunities open to other countries with that status. In this insistence we can determine why exactly this is more than a mere disagreement over definitions. After all, in all other aspects, the administration of Xi Jinping has sought to convey a PRC that has already arrived on the world stage, that no longer needs to, in the words of Deng Xiaoping’s memorable admonition, “bide its time”. 

Illustration by Binay Sinha

The truth is that the PRC seeks all the benefits of developing-country status with few of the problems. For example, developing countries that have failed to evolve a sufficiently free, empowered and independent private sector are given a bit of leeway in trade discussions. This is for good reason — the private sector in such countries needs nurturing, and meanwhile, state companies are the primary instruments of economic nation-building. But the PRC is long past such a stage. It now uses its powerful public sector not just to ensure that the control over the economy by the Communist Party continues, but also as agents of its aggressive foreign policy abroad. The question that others will ask is naturally why developing-country status should be used as a shield to deflect criticisms of Beijing’s unwillingness to further reform its public sector. 

This behaviour is replicated across its various forms of international engagement. In the fight against climate change, for example, the PRC is justly celebrated for its decision to make the Paris Agreement on Climate Change possible by signing a bilateral agreement in advance with the United States. But it should also be recalled that it sought to hide behind genuine developing countries in its opposition to a binding agreement on climate in the past — the Paris targets were of course nationally determined and not binding under international law. This served nobody’s interest but Beijing’s. Now that the PRC’s manufacturing and infrastructure build-out is complete, it can appear to make concessions. 

For the developed world, this behaviour is inherently dangerous. It feeds the narrative of populists in the Western world who see the international architecture as privileging the PRC and others like it. In fact, the various institutions, agreements and norms that underpin globalisation very properly embed a distinction between developed and developing economies, and this was a crucial demand when they were being negotiated. The distinction is not sharp enough, and does not extend wide enough — but it is there. If now some in the developed world seek to erase this distinction, it is primarily because it is felt that the PRC is taking undue advantage of it. 

What is important, therefore, is for other developing countries to see clear-eyed where their individual national interest lies. Two things are clear: First, that the developed world must not be allowed to end the distinction made between them and developing countries — called “special and differential treatment” in the trade literature and “common but differentiated responsibilities” in climate change agreements. The second basic point is that the PRC must no longer be subject to the exemptions made for other developing economies. 

India, with a per-capita income one-fifth of the PRC’s, is very much still a low-middle income country. Its interests are not the same as the PRC’s in international fora, and it should object to being put in the same bracket as the PRC either by Beijing or by Western capitals. In other words, it is clearly in the Indian national interest to distinguish its own interests, as a genuine developing country, from those of the PRC. It is also in India’s interest to ensure that other developing countries see the threat of being lumped in with the PRC in this manner — especially when the latter is being accused of essentially taking advantage of the international system in a manner that India most emphatically does not. 

New Delhi needs to take the lead in creating a grand bargain that maintains the special status of developing countries in the international arena while making it sufficiently adaptable to respond to the new status of those who have outgrown the need for special treatment. The $10,000-$12,000 per capita level is a good place at which to set a “graduation ceremony”, as it were, for countries that can no longer be considered to be among the developing world. These countries should be deemed to now possess sufficient resources to make their own way in the world, like other developed economies. If India and other genuine developing countries do not make this case, they will find themselves disadvantaged severely in future “reform” of the global governance architecture. In the past, India has suffered severely from its unwillingness to distinguish itself from the PRC, and from remaining in thrall to old-fashioned ideas of “south-south” co-operation. It is now time to outgrow that positioning, given that others in the erstwhile global south have outgrown the need for it. 

Email: m.s.sharma@gmail.com; Twitter: @mihirssharma