On September 23, 2025, at the podium of the United Nations General Assembly in New York, Chinese Premier Li Qiang announced that China would no longer seek new “developing country” privileges in future World Trade Organization (WTO) negotiations. The announcement immediately attracted international attention, marking what many see as a major turning point in China’s role in the global trade system. For China, this move is not only an external declaration but also an internal repositioning. For decades, Beijing has emphasized its identity as the “largest developing country,” a status that secured longer transition periods, looser trade obligations, and space for subsidies. By now voluntarily renouncing new concessions, China signals that the shift is driven both by international pressure and by strategic calculation.

From 2001 to 2025: Historical Trajectory and Role Transition

To appreciate the significance of this decision, one must recall China’s two-decade journey with the WTO. When China acceded in 2001, it was hailed as a milestone of integration into globalization. With developing country status, China benefited from extended grace periods, relatively high tariff protections, and government subsidies for targeted industries. Coupled with its abundant low-cost labor, these institutional advantages enabled China to become the “world’s factory.” In just twenty years, its exports multiplied severalfold, and the Chinese economy rose from the world’s sixth-largest to the second-largest, second only to the United States.

Yet the China of 2025 is very different. It is an industrial powerhouse at the heart of global supply chains, but its per capita GDP remains comparable to that of Thailand or Mexico. Regional disparities and uneven development persist. This duality has long shaped China’s international positioning: projecting itself as a global power while simultaneously clinging to developing country privileges. Li’s declaration—that China will no longer seek new benefits yet will still retain its developing country status—embodies this paradox. The moment echoes China’s WTO accession in 2001: if the first milestone was about entering and exploiting institutional dividends, the current one is about adjusting and redefining institutional identity.

Pragmatic Choices Under External Pressure

This policy is less a gesture of “self-surpassing” than a pragmatic response to external constraints. Beginning in 2018, the Trump administration launched a sweeping trade war against China, imposing tariffs on hundreds of billions of dollars’ worth of Chinese goods and bypassing WTO multilateral mechanisms through unilateral action. The WTO’s dispute settlement system was crippled, its rule enforcement weakened. In parallel, Washington publicly questioned the legitimacy of China’s developing country status, making Beijing’s “dual identity” a flashpoint of global controversy.

During Trump’s second term, the trade war escalated into a global tariff blockade, extending beyond the United States. India, Vietnam, Indonesia, Brazil, Turkey, and Mexico imposed steep tariffs on Chinese products, while the EU, Canada, and Australia adopted similar measures. In such an environment, even if China were to secure more WTO privileges, its practical gains would be marginal. Persisting with demands for special treatment risked deepening China’s isolation. By renouncing them, Beijing reduced external pressure and demonstrated flexibility—transforming constraint into strategic maneuver.

Why Now? The “World Factory” Dilemma and Domestic Bottlenecks

China’s timing also reflects internal economic pressures. For decades, its export-led “world factory” model—anchored in manufacturing clusters—was central to growth. But with the decline of demographic dividends, rising labor costs, and the persistence of high tariffs after the trade war, its comparative advantage in manufacturing has eroded. More crucially, domestic demand has struggled to offset declining exports. Weak consumption, a fragile real estate sector, and worsening local government finances have limited the effectiveness of Beijing’s “domestic demand-driven growth” strategy.

In this context, holding on to developing country benefits would not resolve structural constraints. By contrast, voluntarily relinquishing new privileges could improve China’s international image and offer leverage in other arenas. The signal is clear: the “world factory” model is no longer sufficient as the sole pillar of growth. Beijing must now pursue industrial upgrading, technological innovation, and domestic market expansion. Li’s declaration thus reflects not only an external adjustment but also an implicit recognition of internal economic transformation pressures.

Strategic Flexibility in Dual Positioning

Li underscored that China will continue to claim developing country status. This signals a deliberate balancing act: China does not want to shed the aura of a responsible great power, but neither is it willing to abandon the policy space associated with being a developing country. Externally, Beijing can project itself as a responsible stakeholder; domestically, it can justify retaining preferential treatment for sectors yet to fully modernize.

This “dual positioning” also allows China to strategically switch identities depending on the context. When advanced economies demand more responsibility, Beijing can stress its developing country attributes. Conversely, in its dealings with other emerging economies, it can present itself as a “developing great power” that provides aid and infrastructure investment. Such flexibility helps China delay the burden of full responsibility while retaining influence in the Global South. In short, the policy is as much about identity politics as it is about trade.

Diplomatic Signaling Toward the United States

Diplomatic calculations are also at play. Many interpret the announcement as preparation for the forthcoming “Trump–Xi summit.” In an effort to encourage Trump’s visit to China, Beijing has even hinted at concessions on TikTok, allowing U.S. firms to take controlling stakes. Softening on WTO status is another “olive branch”: both a gesture to Washington and a means of easing domestic political pressure. That the announcement was delivered by Premier Li Qiang highlights both his role and the division of labor within China’s leadership when navigating diplomatic challenges.

At a deeper level, the move is not solely directed at the United States but also at the broader international community. With mounting tensions over the South China Sea, technology supply chains, and regional security, demonstrating “pragmatism and compromise” in trade policy is designed to buy China breathing space elsewhere. For Washington, this may appear as tactical adjustment rather than structural change. For Beijing, it is a calculated “small concession” in exchange for room to maneuver on core strategic interests.

Japan’s Perspective and Regional Implications

For Japan, China’s WTO adjustment is more than an economic policy choice—it reshapes institutional competition in the Asia-Pacific. Historically, China leveraged its developing country status while simultaneously promoting initiatives such as the Belt and Road and RCEP to amplify its normative influence. By renouncing new privileges, Beijing may redirect its focus to regional frameworks, consolidating its position within RCEP and even signaling renewed interest in joining the CPTPP. This could create a new form of “institutional rivalry”: Tokyo fears Beijing expanding influence through RCEP, yet it may also use China’s softened WTO posture to reinforce high-standard rules in the CPTPP.

Compared to other emerging economies, China’s insistence on being both the world’s second-largest economy and a developing country carries far greater strategic weight. If its dual positioning gains acceptance, Beijing could further entrench its leadership over the Global South, enhancing its appeal through South-South cooperation and infrastructure finance. For Japan’s Free and Open Indo-Pacific (FOIP) strategy, this represents a dual challenge: how to maintain multilateral standards while addressing regional partners’ reliance on Chinese capital and markets. From an international relations perspective, this is not merely an economic adjustment but an exercise in “institutional power,” with Beijing’s identity-switching strategy serving as a key source of its bargaining leverage.

Conclusion: A New Milestone

China’s renunciation of new WTO privileges represents more than trade policy fine-tuning—it is a redefinition of international identity. From joining the WTO in 2001 and exploiting the dividends of the “world factory,” to voluntarily relinquishing parts of those dividends in 2025, Beijing is transitioning from “institutional user” to “institutional shaper.” Yet the contradictions remain: China is simultaneously a global economic power and a self-proclaimed developing country, balancing great power responsibility with the preservation of policy flexibility.

International reactions are mixed. Washington is likely to interpret the move as tactical rather than transformative, maintaining tariffs and technological restrictions. The EU and Japan may welcome Beijing’s “symbolic concession,” but remain cautious, waiting to see if actions match words. For Japan, the adjustment offers both an opening for multilateral cooperation and a reminder to reinforce its normative leadership within CPTPP and FOIP frameworks.

Ultimately, this policy is not only a pragmatic response to external trade realities but also a recalibration of identity politics and institutional power. How Japan and other Asia-Pacific states respond to China’s “dual positioning” within the WTO, RCEP, and CPTPP will be central to the evolution of Indo-Pacific order. Li Qiang’s announcement marks both a historical turning point and a strategic recalibration, reflecting how great powers maneuver within the fault lines of globalization and de-globalization. Whether China can sustain growth while shouldering responsibilities commensurate with its stature will remain a critical test—closely watched by the international community, especially its neighbors in the Asia-Pacific.