How China Is Taking Advantage of Its WTO Nation Status

What Happened: Last April, President Trump told reporters during his daily White House news conference on COVID-19 that “China has been unbelievably taking advantage of the US.” He then vented his frustration on China and its “developing nation” status, saying, “I said, well then, make us a developing nation, too.”

President Trump is hardly the first to take note of  China’s “developing country” status. Scott Morrison, the Australian prime minister, said that “China’s economic growth is welcomed by Australia.”  He also acknowledged “the economic maturity that it has now realized as a newly developed economy.” He also supported Washington’s claims that “the world’s global institutions must adjust their settings for China, in recognition of this new status.”

Jing Take: China is the second-largest economy in the world, with the GDP of an economic superpower: $14.14 trillion with a purchasing power parity (PPP) of $27.31 trillion. Moreover, a Credit Suisse report highlights that the number of affluent Chinese people overcame the number of wealthy Americans in 2019. The bank’s annual wealth survey found that China has 100 million people among the world’s top 10 percent of wealthy individuals, as compared to 99 million in the US. And yet, the WTO still considers China a “developing country,” and Beijing insists on maintaining this status at the Geneva-based institution.

That’s because giving up the self-declared status of a “developing country” means losing “special and differential treatment.” China now enjoys the non-reciprocal preferential treatment, which means that developed nations are bonded to offer “special and differential treatment provisions” to China.

Essentially, China has various perks, including the right to restrict imports to protect specific industries. It also means that Beijing complies with WTO obligations, but it can take on fewer commitments under the organization’s framework. China won’t give up its “developing-nation” status because that would mean lowering tariffs, losing export subsidies, relinquishing WTO support, waiving perks, and losing the opportunity to restrict imports.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.