Opinion

Developing country status

By Li Qingyuan (China Daily)
Updated: 2010-08-19 09:04

Compared with developed countries, China is still in the middle stage of modernization and has yet to catch up

Despite its overtaking Japan in second quarter economic output, the basic fact that China is still in the primary stage of socialism determines that the country will still be a developing nation for a long period in the future.

It is an indisputable fact that China ranks among the world's middle and low-income countries in terms of per capita gross domestic product (GDP). Based on gross national income per capita basis, the World Bank classifies countries into four categories: low income, lower middle income, upper middle income and high income economies, with the first three classified as developing nations.

According to the National Bureau of Statistics, China's per capita GDP in 2008 was $3,330. A World Bank report for the same year put the figure at $2,940 and ranked the country 130th in the world, labeling it a lower middle-income country.

That classification was confirmed by the 2009 data released by the International Monetary Fund, which said China's per capita GDP the previous year ranked it 105th in the world.

The large proportion of China's rural and impoverished population means the country has not yet extricated itself from a developing nation status. Of the country's 1.3 billion population, 700 million, or about 58 percent, still live in rural areas, seven percentage points higher than the world's average level of 51 percent.

According to the, "one dollar a person a day", poverty standard set by the United Nations, China still has 150 million people living below the poverty line, unevenly distributed in 512 poor counties. Even according to the low-income standard worked out by China in 2009 - which set an annual income of 1,067 yuan as the threshold dividing those who weren't living in poverty from those who were - the country still has about 43 million people living in poverty, a figure equivalent to the whole population of the People's Republic of Korea and five times Singapore's population.

Despite the enormous progress the country has achieved in alleviating poverty, China's impoverished population still remains the world's second largest, only India's is larger.

China's economic growth is still not securely founded, its productivity is comparatively low and the country's agricultural mechanization is still at a relatively low level, with only 71 tractors for every 100 square kilometers of arable land, one-third the world's average, 2003-05 data showed.

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While technological innovations have contributed 60 percent to economic growth in developed countries, China's economic growth still mainly depends on traditional technologies and sectors with a low added value. It is calculated that China's consumption of steel, bronze, aluminum, zinc and other metals for every 10,000 yuan of its GDP value is much higher than developed countries, and possibly four to six times the world average. The country's economic output per unit of resources is only one-sixth, one-tenth and one-20th that of Germany, the United States and Japan respectively. For every one standard unit of coal, only $785 economic output can be produced, or 10.3 percent, 16.8 percent and 28.6 percent of Japan, the European Union and the US respectively.

Besides its comparatively low productivity, China's industrial and economic structures also have some worrisome problems, with industrial and agricultural value accounting for 49 percent and 11 percent of its economic output, with the service sector supplying only 40 percent. Whereas in some high-income countries it is the service sector that is creating the lion's share of their economic output.

China's urban and rural economic development is also seriously unbalanced, with the per capita disposable income in urban areas 3.3 times that of rural areas in 2008. The Gini coefficient, an index to measure the rich-poor gap, was 0.415 in this country the same year, not only higher than that in developed countries, but also higher than that in such developing countries as Romania, India and Malaysia.

In terms of its social development process, China is still in the middle stage of modernization. In 2009, the country's urbanization rate was 46.6 percent, lower than the 50 percent world average, and much lower than the average level in the US and European countries, where it was 80 percent. The same year, the country's Human Development Index (HDI), worked out by the United Nations Development Program, was only 0.772, which ranked it 92nd in the world, while the figure for the Organization for Economic Co-operation and Development (OCED), countries, the EU and Gulf Cooperation Council (GCC) countries was: 0.932, 0.937 and 0.868 respectively.

Despite a remarkable progress in its economic development over the past decades, China has yet to make significant efforts to improve its education, medical care and social security infrastructure. In 2008, the country spent about 2.4 percent of its fiscal revenues on education, compared to the 4.9 percent world average, the 5 percent of OECD members, and 4 percent of middle-income countries. When it comes to the country's per capita public educational outlay, the figure is as meager as $40 a year, less than 2 percent, 3.4 percent and 20 percent that of the US, Japan and Brazil respectively. The country's per capita spending in medical care and social insurance is also incomparable with developed countries and even many developing ones.

China's colossal economic output has not changed its long-time disadvantages in core international competitiveness and the reality that the country has long been at the low end of global industrial chains. The input of 1.45 percent of its GDP into science and technology is far behind developed countries, which is 2.25 percent in OCED countries and nearly 3 percent in the US and Japan respectively. The labor-intensive and resources-exhausting manufacturing lacking sufficient input into scientific and technological innovations means China is still only a supplier of the world's high-end products.

The author is a scholar of international studies