China 'Still a Developing Nation' Despite Being World's Second Largest Economy

China insisted on August 17 that it was still a developing nation despite overtaking Japan as the world's second largest economy, in the face of pressure to take on a greater role in global affairs.

Thirty years after opening its doors to the outside world, China has enjoyed spectacular economic growth and already claimed the titles of world's top exporter, auto market and steelmaker. After outpacing Japan in the second quarter, China is on course this year to officially confirm its position as world number two -- a title Japan held for 40 years -- underscoring its emergence as a global economic and political force.

While some analysts are predicting that China could take on the top spot from the United States within a few decades, commentators insisted it remained a developing nation with tens of millions living in poverty.

Commerce ministry spokesman Yao Jian said China still lagged far behind its rivals in per capita terms and has a long way to go to becoming a world-class power. "The quality of China's economic growth still needs to be improved, no matter whether it is in terms of people's quality of life or in terms of science, technology and environmental protection."

"We still have an enormous gap to make up."

He said China's per capita GDP was $3,800 -- putting it around 105th in the world -- and that 150 million of its 1.3 billion people live below the poverty line, according to UN standards.

"China's economy will continue to develop because China has a large population and its economy lagged behind," he said.

The foreign ministry also insisted China was still a developing country, noting the nation's position at "the bottom of the global industrial chain", China News Service reported.

"The international responsibilities undertaken by China should not be decided by one country or organization but based on... China's actual ability," Zhu Honghai, a policy official, was quoted as saying.

Japanese government data issued on August 17 showed that its second quarter GDP on a nominal basis came in at $1.288 trillion, below China's $1.336 trillion, although Japan remained stronger over the first half.

China has for years stormed ahead with double-digit growth in gross domestic product, dwarfing Japan's relatively low rates of expansion, although figures for the second half of 2010 are expected to show it losing some steam.

China's official press declared that while contributing to global growth and helping to drive the world's recovery from the financial crisis, China was still transforming itself into a world-class economic power. "The Chinese economy still has a lot more room to grow and can contribute even more to the global recovery," the English-language China Daily said in an editorial.

"But for those who expect China to assume greater international responsibilities just because of the size of its economy, they should take a hard look at the enormous development challenges that the country still faces."

The international community has been pushing China -- which has been using its clout to bolster its economic and diplomatic influence as far away as Africa and Latin America -- to take a more active role in addressing issues such as climate change and trade imbalances.

In just three decades, China has leapfrogged Britain, France and Germany on its economic ascent and has won developing countries a bigger say in the World Bank and International Monetary Fund.

But the People's Daily said in a commentary: "China's economic strength is also still at the level of a developing nation. So the world's second-largest economy is not the equivalent of the second-largest economic power."

Yang Yi, a professor at Beijing Foreign Studies University, told the China Daily that China was still bogged down by poverty and the widening rich-poor divide.

China's economy grew 11.9% in the first quarter but slowed to 10.3% in the April-June period after Beijing introduced a slew of measures designed to rein in soaring property prices and avoid overheating.

Beijing has said a slowdown is good for sustainable long-term development of China as policymakers try to reduce the country's heavy reliance on exports and investment to drive growth.

"There is no need to be overly worried about the rate of economic expansion," Fan Jianping of the State Information Centre, a government sponsored think-tank, said on August 17

People's Daily columnist Li Hong boldly predicted that in 15 to 25 years China could overtake the United States -- whose economy is currently about three times the size of China's.

"Our ultimate goal is, naturally, to reach the pinnacle by surpassing the United States and, once again, becoming the largest economy," Li wrote in the ruling Communist Party mouthpiece.