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May 10, 2023

King, Thune Introduce Bipartisan Resolution to Confront China’s “Economic Fraud”

China currently self-designates as a developing country, giving it an unfair advantage over other countries and American businesses

WASHINGTON, D.C. — U.S. Senators Angus King (I-Maine) and John Thune (R-S.D.) have introduced a resolution to address China’s exploitation of international trade rules and create a more level global economic playing field. The resolution calls on the World Trade Organization (WTO) to reform its special and differential treatment rules so competitive countries, such as the People’s Republic of China, are not able to self-designate as a ‘developing country’ in order to gain unfair advantages over the United States and its hardworking businesses who follow international economic rules.

Under the WTO, developing countries can receive special and differential treatment, which includes weaker market access commitments and longer timeframes for implementing agreements. Since the WTO does not define “developed” or “developing,” member countries self-declare their development status.

“China calling itself a ‘developing nation’ – while having the world’s second-largest economy – is a ridiculous economic fraud,” said Senator King. “This preposterous self-designation is yet another example of China abusing well-intended economic guidelines at the expense of American businesses and the rest of the world. The World Trade Organization must change their rules to stop China from receiving special treatment it doesn’t deserve.”

“China, which has the world’s second-largest economy after the United States, should not be able to self-designate as a developing country to gain unfair trade advantages, especially as the Chinese Communist Party takes advantage of actual developing countries through the predatory lending of the Belt and Road Initiative,” said Senator Thune. “This designation intentionally misidentifies China’s economic stature, undermines countries that are truly developing, and erodes trust in the rules-based trading system. Meaningful reforms at the WTO need to be made, and reserving special treatment for truly developing countries would be a good start.”

“It’s time the WTO tightens up its rules so that China is held accountable for unfair trade practices,” said Kathie Leonard, President/CEO of Auburn Manufacturing. “China was allowed to join the WTO with “market economy” and ‘developing country’ designations. After two decades of heavily subsidizing exports, China has become a powerful economic engine. It should be obvious to the WTO that China was never a market economy nor is it a developing economy today.”

When China entered the WTO in 2001, its true development status at the time was vastly different than it is in 2023. Today, China has the world’s second-largest economy, and the World Bank categorizes China as an upper-middle-income country. In addition, China is a major source of foreign direct investment and provides billions of dollars for cross-border infrastructure through the Belt and Road Initiative and other geo-economic projects around the world.

Senator King has stood up for Maine businesses against China’s efforts to exploit global trade norms. Last year, he called on the Biden administration to hold China accountable for breaking promises to the Maine lobster industry and provide much needed transparency on a 2020 trade deal. He has also worked to curb the United States’ reliance on China for critical minerals and other key resources.

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