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BMW factory in China (Photo from reviewcars on Youtube)

In December of 1978, the Communist regime of China initiated a series of economic reforms that pushed China into the global market and that has resulted in the massive explosion of industry in that country. The GDP per capita sky-rocketed and, according to the International Monetary Fund, China took Japan’s place as the second largest economy by nominal GDP in 2010.

With all of this economic growth and industrialization, how is that China is still considered a developing country? What line must it cross to reach “developed country” status?

The U.N. Development Programme has several statistics to measure development in a country, the most important being the Human Development Index (HDI), which runs on a scale from 0 to 1.0. HDI consolidates four pieces of data to determine a country’s rate of development. These data are per capita gross national income (GNI), literacy rate, amount of education, and life expectancy. The higher the score, the better. Most developed countries have HDIs of 0.8+. For several years, Norway has ranked first on the HDI, with a score of 0.949 in 2015.[1]

Beijing, China city
Photo from eChinaExpat

In addition, certain other indicators tell us about the level of development in a nation. The key indicators are[2]:

  • Economic
    • GDP per capita, or GDP divided by population
    • The types of jobs worked and the percentage of the GDP devoted to the primary (agriculture, mining, fishing, forestry), secondary (manufacturing), and tertiary (service) sectors
    • Total-factor productivity, which calculates economic efficiency (see this article for more information)
    • The quantity of raw materials available
    • The number of consumer goods (cars, phones, etc.) used by the population
  • Social
    • Student/teacher ratio
    • Literacy rate
    • Availability of medical care
  • Demographic
    • Life expectancy
    • Infant mortality rate, which calculates the number of deaths of children under 1 year old per 1,000 live births
    • Natural increase rate, which calculates the difference between the number of births and the number of deaths and divides that quantity by 10
    • Crude birth rate, which calculates the number of live births per 1,000 people

Armed with this information, we can now see how China measures up.* (Note: The graph below excludes the raw materials and consumer goods statistics of the economic indicators, as information on this measure is not readily available.)

Index China’s statistics
Human Development Index (HDI) Composite: 0.738 (#90)
Economic indicators GDP per capita: $8,069.21
% of GDP in primary sector (2013): 10%
% of GDP in secondary sector (2013): 44%
% of GDP in tertiary sector (2013): 46%
Total-factor productivity: growth of -1.3 in 2015
Social indicators Student/teacher ratio: 16.29:1
Literacy rate: 96.4%
Health care as share of GDP (2014): 5.4%
Demographic indicators Life expectancy: 76.0 years
Infant mortality rate: 9.2
Natural increase rate (2017): 0.57%
Crude birth rate: 12.1

*Values listed are based on 2015 data, unless otherwise noted

Demographically, China has many of the characteristics of a more developed country (MDC). In fact, according to the demographic transition model of geography, China is in the fourth, post-transition stage and is now an economically industrialized state. (According to demographic transition, a country undergoes certain changes in child birth rate, child death rate, and natural increase rate as it transitions from a pre-industrialized state to an industrialized state.)

Industry in China
Photo from China Daily

Nevertheless, China’ HDI score discounts it from the developed countries list, as most MDCs have HDIs of 0.8 or more. In addition, the economic indicators lend credence to the LDC (less developed country) designation.

On the GDP per capita: Economists consider a GDP per capita of $12,000 the minimum value for developed countries. China’s $8,069.21 falls almost $4,000 below that.

On participation in the primary sector: A primary sector that dominates 10% of China’s GDP is much larger than in developed countries. In the U.S., U.K., and Japan, agriculture makes up only 1% of GDP.[3]

On total-factor productivity: From 1996-2006 TFR in China grew by 2.6, and only 0.5 in the United States, 0.4 in Europe, and 0.1 in Japan.[4] At first glance, it seems that China outpaces the major developed areas in economic development and resource productivity. However, consider that until the 1970s China lagged far behind the rest of the world in industry. Such growth has only brought it, according to Penn World Tables, to 40% of the U.S. level.[5] From 2007 on, TFR growth in China has slowed, dropping -1.3 in 2015. This indicates that the resources (capital and labor) are not being productively managed.

In social indicators, level of healthcare stands out. A healthcare expenditure of 5.4% places China below the OECD average of 9.3%.[6] Furthermore, social conditions that the U.N. Development Programme does not measure mark China as less developed – namely, poor human rights. For more on the human rights issues in China, see the 2018 report from the Human Rights Watch, an international NGO based in New York that has conducted research on the state of human rights in 80+ countries since 1978.

Censorship in China
Image from Uyghur American Association

Thus it is that despite rapid industrial growth and increasing political influence, China still has much in the economic and social/human rights sectors to improve before elevation from LDC to MDC – developing to developed.

[1] HDI report
[2] The Cultural Landscape, 11th edition
[3] An examination of China’s GDP
[4] Economic growth around the world
[5] Economic growth in China
[6] Health statistics of China