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Why does China remain a developing country

By H.E. Fu Yuancong
Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to the Democratic Republic of Timor-Leste

I noticed recently that "China becoming the second largest economy" had been media's hot topic worldwide. Statistics show that China's GDP has surpassed that of Japan in the second quarter of this year, and China's gross economic volume is expected to rank No. 2 in the world by the end of this year.

As a witness of and participant in China's 30-year-over reform and opening-up, I feel very proud of the great success China has so far scored. Becoming the second largest economy is a milestone, significant enough to reflect China's progress in terms of economic development, market scale and overall strength. This attributes to the persistent policy of reform and opening-up and concerted efforts of all Chinese people. It proves that the development road chosen by the Chinese people is a right one and accords with China's reality. Meanwhile, we are sober-minded that China remains a developing country, with a long way to go and tremendous tasks to fulfill, even if its GDP would become second largest in the world. We know, it's not the moment for China to rest or celebrate. Why is that?

Firstly, in terms of per capita GDP, China is still a low-income or middle-income country. According to international practice, it can't be judged as a developed country unless its per capita GDP exceeds USD 10000, that is to say, the title "developed country" is judged on the per capita basis rather than overall volume. As released by IMF in April 2010, China's per capita GDP of 2009 is USD 3677.89, ranking No. 97 in the world and on the low side of the low & middle income interval. This figure only accounts for 8% of that of United States, 9% of Germany and 9.2% of Japan.

Secondly, in terms of resource dispositions, China is a country of rather small hold of resources on per capita basis, compared with even a moderately developed country. China's per capita arable land is 1.4 mu (approximately 466.2 square meters), per capita green area 7.9 square meters. The usage of freshwater by a single Chinese is only 1/3 of the world average. As to consumption of energy, it is much lower than the world average: per capita usage of coal is half of the world average, and per capita usage of natural gas 1/5 of the world average. The above-mentioned figures tell you how large the gap is between China and a moderately developed country.

Thirdly, in terms of population structure, the proportion of rural and poverty-stricken population is still huge. Among the 1.3 billion Chinese people, more than 700 million are living in rural area, almost equal to the population of Egypt. The number of migrant rural labourers in cities is 150 million, almost equal to the population of Russia. Based on UN's criteria (one dollar, one people, one day), China has 150 million people living in 512 counties under poverty line. Even according to the 2009 national low-income standard (RMB¥1,067 per year, nearly USD 159), there are still 43 million Chinese people counted as poverty-stricken population, a figure close to the population of Republic of Korea. Sadly enough, among the 43 million, 15 million are living below the absolute poverty line (RMB¥786 per year,nearly USD 117).

Fourthly, in terms of economic layout, China is faced with acute structural problems. The first one is the structural imbalance of industries. The proportions of industry, agriculture and service industry in GDP are 49%, 11% and 40%, which respectively 11 times, 2 times and 5/9 of those of a high income country. The second is the imbalance between urban and rural areas. In 2008, the per capita disposable income of urban households is 3.3 times of that of rural households. The third is the imbalance among regions. The gross local production in China's eastern provinces is 3 times of that of the western regions, while on per capita basis, the gap is 2.3 times high.

Fifthly, in terms of trade structure, China is still in the very downstream of the global industrial chain. Most of China's industries and enterprises are still labor-intensive and resource-consumptive. Processing trade takes the lion's share in China's imports and exports, yet China's independent system of manufacturing industry stays fragmentary. China's self-owned brands with proprietary IPR are not easy to find in the international market, less than 20% of export-oriented enterprises possess self-owned brands with proprietary IPR. And 60%-70% of exported products are manufactured by transnational corporations in China, which take away most of the profits.

Sixthly, in terms of education, health care and social security, further improvement and development is desperately needed in China's public welfare system, especially in public education and social security. China's financial input into public education only makes up 2.4% of its annual GDP, lower than the world average of 4.9%. The per capita expenditure of health care just equals to 1/8 of the world average. By 2008, there were 34.5 million recipients of subsistence allowances in China's rural area, exceeding the population of Canada. There is an annual increase of 12 million people who need to be offered job opportunities, overrunning the population of Greek. The number of China's disabled people is around 83 million, equal to the population of Germany.

Behind these abstract figures is a real China, a country with good development momentum but numerous difficulties, a country just on the way to industrialization, urbanization and modernization, a country still having a large gap to fill before being developed. Just as Chinese President Hu Jintao put, "China is still world's largest developing country, despite the universally recognized achievements in its modernization drive over last 30 years' reform and opening-up. It is rarely seen, by scale or complexity, the various kinds of conflicts and problems that China is facing. We still have a long way to go, where we can build a well-off society of higher level, modernize the whole country and achieve common prosperity of all Chinese people."

Profound changes are taking place in world political and economic configuration, and the international standing and influence of developing countries are rising. As the world largest developing country, China is fully aware of its international standing and level of development. China will continue to stay concentrated on development. China always follows a path of peaceful development, and never seeks hegemony, now or in the future. China's development poses no threat to anyone. China's development requires a peaceful external environment and will boost world peace and development in the final end. While striving for its own development, China stands ready to bear international responsibilities and obligations in conformity with its capabilities and developmental level, provide foreign assistance to the best of its ability, so as to give full scope to the role of a responsible power in action. The Chinese people would make concerted efforts with the people of all countries, Timor-Leste included, to build a harmonious world of lasting peace and common prosperity.

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