China Officially Relinquishes Developing Nation Status and Its Preferential Trade Terms

China has announced it will not seek new special and differential treatment in current and future World Trade Organisation negotiations, framing the decision as an action by a 'responsible major developing country'.

The declaration was made during events surrounding the 80th session of the United Nations General Assembly.

The Director-General of the WTO, Ngozi Okonjo-Iweala, described the move as 'significant news for WTO reform' in a social media post. She stated that it represented the culmination of years of diligent work and extended her congratulations to China's leadership.

Understanding Special and Differential Treatment

Special and Differential Treatment (SDT) is a foundational principle of the WTO's multilateral trading system. It operates on the core tenet of 'non-full reciprocity', allowing developing countries to take on fewer obligations in trade talks than developed nations to compensate for competitive disadvantages.

WTO rules outline two main categories of SDT measures: preferential terms like better market access and technical aid offered unilaterally by developed countries, and differentiated arrangements such as lower tariff concessions and longer transition periods that developing countries can utilise.

The existing WTO agreements contain 157 provisions for SDT, with nine specifically for least-developed countries, all designed to help them integrate into the global trading system.

China Reaffirms Developing Nation Status

Following the announcement, China's Ministry of Commerce held a press briefing to elaborate.

Li Chenggang, China's International Trade Negotiator and Vice Minister of Commerce, characterised the step as a major declaration of China's stance and a crucial measure to uphold the multilateral trading system. He said it demonstrated China's commitment through 'concrete actions' and its sense of responsibility as a major country, which would 'inject a powerful boost' into global trade and investment liberalisation.

Mr Li emphasised that China remains the world's largest developing country and that its status and identity as a developing nation 'have not changed'. He affirmed that China has always been a member of the 'Global South' and would 'forever stand with developing countries'.

Han Yong, Director-General of the Department of WTO Affairs at the ministry, added that China's position on three key aspects would remain unchanged in WTO negotiations: its status as a developing member, its resolve to defend the legitimate rights of developing members, and its stance on promoting global trade liberalisation.

Mr Han further stated that China would continue to oppose unilateralism and protectionism, uphold core WTO principles, and work to incorporate new agreements on investment facilitation and e-commerce into the WTO legal framework.

Potential Global Trade Implications

Analysts suggest China's decision could have profound effects on global trade patterns. In the short term, it is seen as injecting certainty into global trade governance. In the longer term, it may provide a 'Chinese model' for other emerging economies to consider as their international influence grows.

The announcement drew immediate attention in South Korea, with Yonhap News Agency reporting that observers believe the move could give South Korean exporters a price competitive advantage against China.

Zhang Shangzhi, Director of the Korea International Trade Association's Institute for International Trade and Commerce, said that from a medium-to-long-term perspective, the export environment for South Korean agricultural and consumer goods could improve. He also suggested potential positive effects in preventing technology leakage from South Korean firms in China and protecting intellectual property.

However, some observers caution that the impact of China's move might be limited. They argue that the combination of US unilateralism and a global resurgence of trade protectionism has already significantly weakened the effectiveness of the multilateral WTO framework.