China wants to be a responsible power, just not a 'developed' one

As the country edges towards high-income status, it is trying to balance upgrading its economy while holding on to its identity asa developing nation.

- Tan Dawn Wei Senior Columnist

Lujiazui financial district in China's Shanghai. For China, decades of investment, cheap credit and export orientation have lifted it into the upper-middle income category, but the frontier of high income demands innovation, strong institutions and sustained productivity growth, the writer says.

(PHOTO: REUTERS)

On the surface, Beijing's recent announcement that it will forgo benefits given to developing countries in future World Trade Organisation (WTO) deals - while maintaining its identity as one — appears contradictory.

But since the WTO does not have a formal process to determine which country is “developed” or “developing” and leaves it to members to self-designate, China’s status as a developing nation - which it declared when it joined the WTO in 2001 — is still valid.

Its decision to retain the label but give up the levers of preferential treatment is a calibrated move to project itself as a responsible major power, while preserving its role as champion of the Global South.

WTO's Special and Differential Treatment (SDT) provisions are meant to help developing economies integrate into global trade through longer transition periods, flexible obligations and technical assistance.

While China benefited from these arrangements after joining the WTO, its ascent to become the world’s second-largest economy has made its continued use of such privileges increasingly controversial.

The US and other advanced economies have accused Beijing of exploiting its status to secure unfair advantages, prompting political efforts, such as a 2023 US congressional vote to strip China of the label.

By voluntarily renouncing new SDT benefits, Beijing is signalling that it is willing to shoulder greater global responsibilities and counter Western narratives that it has been getting a free ride of late.