The Chinese are furious. "This is yet another example of the American desire to contain China economically, politically and diplomatically," China Daily, the official mouthpiece of the Chinese Communist Party, said in an article published Monday (April 3rd). Even the South China Morning Post, a more independent Hong Kong daily, points out that "this will be interpreted as an American ruse to stifle Chinese development."

The object of this ire? A US law that aims to deprive China of its status as a developing country. Dubbed "PRC Is Not a Developing Country", it was unanimously adopted by the House of Representatives on Monday, March 27, and is now on the desk of the Senate Foreign Relations Committee.

A Trumpian obsession

The 415 U.S. lawmakers who took part in the House ballot voted as one to mandate Secretary of State Anthony Blinken to go on a crusade. Its mission, if the law is also adopted by the senators: to convince major institutions such as the World Bank, the United Nations or the International Monetary Fund, that China is no longer a simple developing country.

"The People's Republic of China is the second largest economy in the world, accounting for 18.6% of the world economy. The United States is considered a developed country, so the People's Republic of China should be as well," said Young Kim, a Republican congresswoman from California and a promoter of the bill.

This battle to bring China into the club of middle-income countries, or even so-called developed countries, is not new. This was one of Donald Trump's fixed ideas. In 2019, the former US president accused Beijing of "cheating" international trade rules and, a few months before losing the 2020 presidential election, he repeated that he wanted to deprive China of its status as a developing country.

The unanimous adoption of this new law demonstrates that this Trumpian obsession is now the subject of a bipartisan consensus. It must be said that there is no shortage of reasons to classify China in the category of so-called rich countries. "Can we consider that a developing country can also be the world's leading industrial power, and the second largest exporter of cars?" asks Jean-François Dufour, an expert on the Chinese economy and co-founder of Sinopole, a resource center on China.

"In Washington's view, China is also adopting developed country behaviors such as the New Silk Roads – its vast overseas investment program – and the enormous resources allocated to modernizing its military," said Xin Sun, an expert on Chinese economics at King's College London.

Beijing wants to remain poor... on paper

But Beijing also has no shortage of arguments to stay in the court of developing countries. First, "according to the World Bank's ranking criteria (Human Development Index), and the United Nations (GDP per capita), China is just below the most developed countries," notes Xin Sun. In the sense of the World Bank and the UN, China is in the same category as Mexico or Malaysia.

Chinese wealth also depends a lot on a few metropolises such as Beijing or Shanghai. "We always forget a little quickly the invisible China, that is to say the rural environment which still concentrates 64% of the population. Living conditions – whether in terms of access to healthcare, the quality of infrastructure or the means of heating – are still at the level of developing countries," said Carlotta Rinaudo, China specialist for the International Team for the Study of Security (ITSS) Verona, an international collective of experts in international security issues.

If Washington and Beijing clash on this taxonomic terrain, it is because "the main interest of this status of developing country is that it allows to benefit from preferential trade treatment," explains Jean-François Dufour. World Bank loans to developing countries have lower interest rates, and these countries can impose tariffs on imports from so-called rich countries. In addition, "developing countries are subject to fewer constraints in the fight against global warming," Xin Sun said.

The United States wants this to stop because it "believes that Beijing is using the advantages of this status to assert its influence on the international scene at the expense of Washington," said Carlotta Rinaudo. China can thus obtain preferential loans from international organizations financed mainly by the United States and then invest in countries where Beijing seeks to compete with Washington. In other words, the U.S. legislator is concerned that some of the money that the U.S. provides to structures like the World Bank will end up in the pockets of China, which uses it against U.S. interests.

Beijing in the court of the "villains"

But Beijing says it does not need money from international institutions to invest in foreign countries. For China, the sole objective of this US campaign is to slow growth and destroy jobs in China. "The economic consequences can be real. Indeed, without this status, Beijing would no longer be able to impose tariffs on imports [which drive up the prices of goods produced abroad] and these companies would become less competitive, which could force some to lay off," Xin Sun said.

This semantic tug-of-war also has geopolitical implications. "China has often played the card of leading the group of developing countries against the so-called rich countries led by the United States," Xin Sun said.

If Washington succeeds in promoting China in the exclusive club of developed countries, "it will be more difficult for Beijing to present itself as an alternative to the 'naughty' rich countries. China will pass through the mirror, and will officially become a power likely to dominate others and which can no longer pass itself off as a 'brother country' sharing the same problems," said Jean-François Dufour.

The battle over the future of China's status is likely to last a long time. If the US law passes – it is not yet on the Senate agenda – it will still have to convince international institutions, "which can take years," says Xin Sun. And one country is likely to follow these discussions very closely: India. Indeed, if China is no longer considered a developing country, there will be a place to take at the head of this bloc. And India can appear as the natural candidate for this position. This further strengthens China's determination to fight for its status, according to experts interviewed by France 24. Indeed, Beijing will surely not want to give way to its main rival in Asia.

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