Some Western countries have recently demanded China undertake greater international responsibilities as it is now the world's second largest economy.

 Has China really become a leading economic power? Is it capable of taking on additional responsibilities?

People's Daily Overseas Edition recently spoke to Pei Changhong, Director of the Institute of Finance and Trade Economics of the Chinese Academy of Social Sciences, about these questions.

Still a developing country

How can we have a sober and objective view of China's GDP ascent to the world's second largest economy?

Pei Changhong: It's good news. It is a culmination of the Chinese people's long-term efforts as well as the great achievements China has made since reform and opening up began three decades ago. It is indeed a cause for celebration.

This enormous progress means the Chinese have been freed from worries about basic necessities and lifted out of poverty; and some of them are living well-off lives. But that's all.

First, China remains a low- and middle-income country with a low per-capita GDP. Many figures in the UN's World Development Report 2010 indicate China is still a poor country. For instance, a 2005 survey shows 15.9 percent of the Chinese population live on less than $1.25 a day and 36.3 percent live on less than $2 a day. In other words, the daily living expenses of more than one third of the Chinese are less than a meager 14 yuan ($2). It should be noted China's huge GDP is mainly attributable to its large population. A large economy does not necessarily mean all Chinese are rich-a large number of them remain poor.

Second, with a large territory, China suffers severe regional economic disparities. While the eastern region is rather affluent, the central and western regions are underdeveloped. That's why the Central Government needs to transfer wealth from the eastern region to the central and western regions through redistribution. In addition to transfer payments, it has initiated a series of "partnership assistance" programs. For instance, after holding a conference on promoting the development of Xinjiang Uygur Autonomous Region in May, the Central Government tasked areas in the east to assist cities and counties in Xinjiang as development partners. Since it is obligated to help the central and western regions, the relatively developed eastern region may be hard pressed in terms of further development. This obligation is likely to put a heavy burden on regions that have achieved relatively high standards of living before others.

Third, China is prone to natural disasters. The UN's World Development Report 2010 says China is a country frequently hit by natural disasters. Governments at various levels as well as residents have to devote part of their limited incomes to dealing with local disasters and offering assistance to other disaster-hit areas. Natural disasters cost China much more than many other countries. Given the country's growing GDP, the Chinese Government is expected to shoulder greater responsibilities for disaster relief and poverty reduction. Despite being the world's second largest economy, China still has a long way to go to solve its various problems.

Changing the development mode

Why is China's economy so large but noncompetitive? How can China improve the quality of its economic growth?

China's inefficient economic development mode is the main reason. The large size of its economy results from huge inputs of resources. Fixed asset investment accounts for more than 50 percent of China's GDP every year. China's current economic development mode consumes large quantities of resources and energy. The value added achieved per unit of resource consumption in China is far lower than in developed countries. Scientific and technological progress and top-notch personnel have yet to become major drivers of economic growth. While China's output of many products ranks first worldwide, Chinese products are mostly at the low end of the value chain, with foreign companies dominating core technologies and marketing processes. As a result, China gets the smallest share of profits from products jointly produced by several countries.

If it does not change its economic development mode, China will face energy and resources shortages. As a result, it will have to rely excessively or totally on foreign resources and energy to sustain its economic growth-a scenario that would be detrimental to the world economy. To change its economic development pattern, China needs to devote more financial resources to improving education, fostering human resources and supporting technological research and innovation. In its medium- and long-term plan for educational development issued this year, the Central Government pledged that funds for education would account for up to 4 percent of China's GDP in the future, indicating that the country will spend more on education.

At the same time, China will redouble its efforts to improve people's livelihoods and develop social services, in a bid to boost domestic demand. In addition to education, it will focus on public health, medical care, sports and other social services and related industries. China has set a goal of "building a moderately prosperous society in all respects," which calls for greater concern about people's livelihoods. And the government should allocate more funds to social services to achieve coordinated economic and social development. In this context, providing public goods and services through public spending has been put at the top of the government's agenda. In the future, governments at various levels will provide greater financial support for efforts to improve people's living standards and develop social services.

The situation is similar to three decades ago when China faced the pressing task of national renewal at the beginning of its reform and opening-up program. The country now confronts myriad new challenges. It needs to make the most of its financial resources to promote development at home. That's why the Chinese consider domestic affairs their top priority at present.

Rejecting unreasonable demands

Why shouldn't China rise to the world's second largest economy result in an increase in its economic responsibilities? What responsibilities should China undertake for the world economy?

China, of course, will not shun responsibilities it ought to undertake. But it should take on responsibilities corresponding to its economic and social development. China cannot meet demands that it undertake responsibilities beyond the level of its economic and social development, nor are such demands reasonable.

China has never shied away from its international responsibilities. For instance, it has demonstrated an active stance on coping with global climate change by pledging to cut carbon dioxide emissions per unit of GDP by 40-45 percent by 2020 compared to 2005 levels. The pledge calls for painstaking efforts. In fact, fulfilling every reasonable international obligation is no easy task for China and requires the country make great efforts.

Critics in the West demand China undertake greater international responsibilities by playing up the country's rise to the world's second largest economy. Their attempts highlight defects in the world's economic and political order. Developed countries possess huge reserves of resources and wealth and are backed by an international monetary system skewed in favor of them. While they have yet to honor their own responsibilities, how can they possibly force developing countries, which own fewer resources and less wealth and are at a disadvantaged position in the international monetary system, to take on more responsibilities? China, a nation that has just got rid of poverty, is not capable of undertaking additional responsibilities.

With only 7 percent of the world's farmland, China now feeds 1.3 billion people-nearly one fifth of the world's population. This is, in itself, a big challenge. Based on this achievement, China can undertake some other international obligations in proportion to its economic and social development and within its capacity.

A long way to go

Why do you think some Western countries demand China undertake additional responsibilities?

The reasons are complicated. There are probably four main reasons. First, some hostile forces in the West do not want to see China succeed. In the past, they wielded a big stick over the country. Now they praise it with ulterior motives, while urging it to take on more responsibilities. Second, many foreigners do not understand the real China. As they look only at economic indicators, they may have misunderstandings about the country. Third is jealousy. Most people will be jealous if a neighbor, who was no better than them, suddenly becomes well off. Fourth is the most fundamental reason: China is still not strong enough. In the past when China was poor, it was marginalized in the world community. If it becomes a major world power in the future, hardly anybody will dare to point the finger at it. Now, China is better off than in the past but has yet to become a powerful country. During this period, critics tend to voice all sorts of complaints. China should be prepared for this.

If we do not dispel misunderstandings, demands that China take on unreasonable responsibilities will gain currency in the international community, worsening China's external environment and harming its development. At the same time, China should not be reluctant to let other countries know its problems. In the early 1980s, the Chinese, fearing criticism, were always trying to defend themselves.

In fact, despite growing GDP, the Chinese are not contented. There remain a lot of troubles in their daily lives, and many of them still live hard lives. Ordinary residents are not sensitive to GDP figures. Instead, they are concerned about economic development, income increases and improvements in social services. They will not feel happy until their troubles, such as high housing prices, and difficulties in access to childcare and medical services, are resolved.

China's per-capita GDP now stands at more than $3,000. The government aims to raise the figure to US$7,000-US$10,000 by 2020. By that time, the Chinese will be more satisfied about their lives. But China will not become a moderately developed country with a per-capita GDP of $25,000 to 30,000 until 2049. It has got decades to go before reaching this goal.