china's lessons in poverty reduction

CHINA’S LESSONS IN RURAL POVERTY REDUCTION

Guobao WU, Professor, DirectorCenter for Poverty StudiesChinese Academy of Social Sciences

ISSUES DISCUSSED Definitions of Some Concepts

Related to China’s Poverty Reduction

China’s Progress made in Poverty Reduction

Factors underling China’s success in poverty reduction

Lessons

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DEFINITIONS OF SOME CONCEPTS RELATED TO CHINA’S POVERTY REDUCTION

Poverty in China usually refers to rural poverty

Poverty lines The first poverty line built in 1986 was

defined as per capita net income of RMB 200 in 1984’s price, about 56% of the national per capita income, but declined to only 19% of the national average by 2008

Modified in 2008 by raising the old line by 1/3, but being only one-quarter of the national average

Updated in 2011 with per capita net income almost doubled (up by 92%), about 21% higher than USD 1.9 per day (2011 PPP)

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Poor households Identified by local GOV’T according to estimated

income and physically distinguished indicators Eligible for access to any poverty reduction projects

and resources allocated by the GOV’T Key villages (communities) for poverty reduction

designated by provincial GOV’T based on the criteria (% poor population, infrastructure access, etc.)

Eligible for access to any poverty reduction projects 148,000 villages designated as poverty villages in

2002 and 128,000 in 2015

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Poverty-stricken counties (poor counties) Designated by the national GOV’T since 1986 based on

income and development criteria Eligible for access to any poverty reduction projects and

resources allocated by central GOV’T Serve as the units for planning, implementation and

administration of poverty reduction project Poverty blocks

Regions that encompass contiguous poverty-stricken counties

Designated by national GOV’T, totally 14 blocks defined in 2011

Serve as units for planning and coordination of poverty reduction programs

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DEFINITIONS OF SOME CONCEPTS RELATED TO CHINA’S POVERTY REDUCTION Poverty alleviation and development

Development oriented poverty alleviation focusing on improving the capacities of the poor and poor areas to escape of poverty by themselves

One most important way for poverty reduction of Chinese characteristics

Major poverty alleviation and development phases 1st stage of poverty alleviation and development

1986-1993 China “Lifting Eighty Million out of Poverty in Seven

Years” program (1994-2000) China Poverty Alleviation and Development Program

(2001-2010) China Poverty Alleviation and Development Program

(2011-2020) Precision Targeting Poverty Reduction and

Development (2014-)

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CHINA’S PROGRESS MADE IN POVERTY REDUCTION

The number of rural poor population declined dramatically since 1978

Marked progress made in human development

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Figure 1 Change of poor population in rural China over time

1978 1980 1985 1990 1995 2000 2005 2010 2011 2012 2013 2014 20150

100000000

200000000

300000000

400000000

500000000

600000000

700000000

800000000

900000000

1000000000

770390000765420000

661010000658490000

554630000

462240000

286620000

165670000122380000

98990000824900007017000055750000

877803648

785502408755809502

511979775507860796

244447500

14955597810618627087390290

25111530

Official poverty line USD 1.9 per day

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1980 1990 2000 2010 2011 2012 2013 2014 20150

10

20

30

40

50

60

70

80

90

10096.2

73.5

49.8

17.212.7

10.2 8.5 7.2 5.7

95.6

78.95

56.4

21.315.44

12.98

3.38

Head count ratio based on official poverty line Head count ratio based on USD 1.9 per day (2011 ppp)

Figure 2 Change of poverty head count ratio in rural China over time

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Worldwide China1981 1997.28 877.8

1990 1850.54 755.81

2013 766.62 25.11

Change in size of the poor population 1990-2013

-1083.92 -730.7

China’s contribution 67.41%

Change in size of the poor population 1981-2013

-1230.66 -852.69

China’s contribution 69.29%

Table 1　 China’s contribution toward worldwide poverty reduction（ 1.90 USD a day, 2011 PPP) : 1981-2013

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Figure 3 Change in China’s Human Development Index over 1980-2014

1980 1985 1990 1995 2000 2005 2010 2011 2012 2013 20140

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.430.467

0.501

0.545

0.588

0.641

0.699 0.707 0.718 0.723 0.728

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Indicator Period ValueLife expectancy at birth 1970–75 63.2

2014 75.8Infant mortality (per 1000) 1970 85

2013 10.9Under 5 mortality (per 1000) 1970 120

2013 12.7Adult literacy (%) 1985–94 77.9

2010 95.1Maternal mortality (per 1000) 1990–2005 51

2015 27Access to improved drinking water sources (%)

1990 672015 96

Table 2 China's Change in Human Development Indices

Source: UNDP: http://mdgs.un.org/unsd/mdg/Data.aspx

http://mdgs.un.org/unsd/mdg/Data.aspx

http://mdgs.un.org/unsd/mdg/Data.aspx

KEY FACTORS UNDERLINING THE ACHIEVEMENTS MADE IN PR

Sustained economic growth, combined with

Pro-poor growth pattern Targeting poverty reduction

intervention Improvement in access to social

services Social security system established for

protecting the vulnerable from falling in poverty

Participation of all concerned actors Improvement in management

effectiveness Innovation in poverty reduction

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SUSTAINED ECONOMIC GROWTH The poverty reduction in China has

been supported by sustained economic growth, which works by means of Creating jobs Increasing demands for agricultural

products And increasing the fiscal capacity for

financing the poverty reduction program

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Table 3 Economic Growth and Poverty Reduction in China

1978-

1980

1980-

1985

1985-

1990

1990-

1995

1995-

2000

2000-

2005

2005-

2010

2010-

2014

Annually reduced poor

population（ million） 2.4920.8

80.50

20.77

18.48

35.12

24.19

23.88

Annually growth rate of per capita

GDP（ %） 6.3 9.2 6.3 11.0 7.6 9.1 10.7 7.5

Annually growth rate of VA in

agriculture（ %） 2.3 8.2 4.2 4.1 3.4 3.8 4.3 4.1

Annually growth rate of off-farm

employment（ %） 5.8 7.2 6.6 4.7 2.1 2.7 3.2 3.1

Reduced No. poor population every increased CNY 10,000 GDP 0.84 3.71 0.08 1.28 0.97 1.05 0.38 0.43

GROWTH PATTERN BENEFITING TO THE POOR

Agricultural development, which has been one of the priorities of the national development strategy, has made a large contribution to the poverty reduction in China

The value added of agriculture has grown 4.5% annually over 1978-2014

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Example: agricultural development and poverty reduction over 1978-1985 in China The farmers’ income mainly achieved

through increasing agricultural income, had increased 1.5 folds while the income distribution kept unchanged over 1978-1984, leading to halving of the rural poor population

Major interventions were to increase the farmers’ access to land utilization, increasing agricultural productivity

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The agricultural development for poverty reduction in China further enhanced by Improving physical infrastructure Improving Technical extension networks

Restructuring production organizations

Industrialization of agriculture

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Developing labor intensive economies (e.g. processing industry, construction and services)　 through fast industrialization and urbanization supported by increasing the government investment and FDI

The rural migrated labors increased to 169 million in 2015 from 1.7 million in 1980

The incomes of rural residents earned from off-farm employment in China had increased 134% faster than the average income from 1983 to 2012.

The share of off-farm income for bottom 20% HHs has increased to 43% in 2012 from 26% in 2002

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GROWTH PATTERN BENEFITING TO THE POOR− Sustained and extensive

development in physical infrastructure• Improving the living conditions• Increasing social productivities• Creating employments

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Supporting the development of SMEs 81 million more jobs created by SMEs in

rural China from 1992 to 2014 Market integration and supportive

policies Reducing regional disparity

Regional integration Special regional development programs,

in particular, the west development strategy

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A CASE: WEST DEVELOPMENT STRATEGY The west regions with 71% of total land areas

and 26% of population fell behind the rest of the country in development

Starting from 2000, total investment amounted to RMB 6.1 trillion up to 2014

Major interventions: improving physical and environmental infrastructure, social services, and supporting the development of growth centers

The gap of GDP per capita between the west and the rest declined

Gaps remained

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201460

70

80

90

100

110

120

130

140

150

160

170

East regionCentral regionWest region

% o

f nati

onal

ave

rage

Figure 4 Change in the rate of GDP per capita in three regions against national average

TARGETING POVERTY REDUCTION INTERVENTION

Intervention of Chinese characteristics, but it does work well for poverty reduction

Focusing on raising the capacities of the poor and poor areas and improving their access to assets to reduce poverty by themselves

Area targeting poverty intervention, 18 regions 1986, 592 counties identified 1994, 148,000 villages identified 2001,14 blocks identified in 2011

Comprehensive interventions Interventions based on the contexts and

causes of poverty in the targeting areas

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TARGETING POVERTY REDUCTION INTERVENTION

Major interventions improving physical infrastructure, such as road, electricity, water supply, irrigation;

improving social services, mainly education, health care, social assistance;

Supporting income generation by providing technical training and access to credit

Assisting in migrated employment Resettlement of the poor living in the remote and ecologically fragile areas

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POVERTY REDUCTION PROGRAMS Central budgetary funds RMB 470 billion

and poverty alleviation loans of RMB 300 billion from 1980-2016 allocated

Six specific programs implemented Integrated poverty village

development program, 20% of the national villages covered. Village is taken as a unit to launch integrated intervention based on the constraints and resources available in the village

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POVERTY REDUCTION PROGRAMS

Agricultural industrialization for poverty reduction program by supporting the leading modern agricultural production and processing business to link the poor small holders to market， 625 dragon head enterprises identified and 10 million poor farmers benefitted

Training for the poor labors to gain outside employment program by skill training for poor labors to earn more wage and salaries

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POVERTY REDUCTION PROGRAMS

Resettlement for poverty reduction program by resettling the poor in the areas lacking necessary production and living conditions, over four million farmers resettled

Public works (food for work) program, RMB 102 billion allocated through the program for rural infrastructure

Government department participation in poverty reduction, 320 central departments and large state owned enterprises involved and mobilized over RMB 80 billion funds and human resources in last five years

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POVERTY REDUCTION PROGRAMS East-west partnership for poverty

reduction built at government, corporates and individual level. The areas cover funding, human resources and business cooperation on basis of social responsibility and mutual benefit principles

NGO’s involvement in poverty reduction. Contributions by social and civil society organizations have mostly been in the areas of resource mobilization and the promoting of innovation in ways for poverty reduction in addition to donations

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Year

% Villages accessible to

motorable road

% Villages accessible to

electricity

% Villages accessible to telephone

% Villages accessible to TV signals

National Average

Poor counties

National Average

Poor counties

National Average

Poor counties

National Average

Poor counties

2000 95.0 92.6 98.1 96.5 87.0 78.3 97.8 96.0 2001 96.0 92.1 98.3 96.0 90.8 72.5 98.1 95.4 2002 96.8 95.4 98.4 96.8 92.2 83.8 98.4 95.8 2003 97.6 96.6 99.0 97.7 95.5 88.4 98.8 96.2 2004 98.0 97.5 99.0 97.8 96.7 90.5 99.1 96.5 2005 97.2 97.8 99.2 98.0 97.1 93.7 98.3 96.4 2006 97.8 99.1 99.4 98.3 98.1 97.2 98.6 97.9 2007 98.6 98.7 99.7 98.3 98.7 97.4 98.9 97.8 2008 98.7 99.0 99.5 98.7 98.7 98.0 99.1 98.0 2009 98.8 99.2 99.6 98.6 99.1 98.2 99.4 98.0 2010 99.1 99.5 99.7 98.8 99.3 98.4 99.5 98.3

Change

2000-2010

4.1 6.9 1.6 2.3 12.3 20.1 1.7 2.3

Table 4 Change in Physical Infrastructure in Poor Counties

PRECISION TARGETING POVERTY REDUCTION AND DEVELOPMENT STRATEGY

Starting in 2014, the strategy focusing on targeting all the resources at the real poor to improve the effectiveness of poverty reduction

Identifying all eligible poor households and villages

Case by case intervention and assistance provided to each poor household

M&E strengthened Responsibility system built

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IMPROVING THE ACCESS OF THE POOR TO SOCIAL SERVICES Education

Universal free compulsory education to improve the access and affordability of the poor

Special program on improving the education in poor areas

Compulsory Education Program in Poor Areas Incorporating education development into the

poverty alleviation and development program Extra educational supports for the

poor Free tuition for the students in technical school Subsidies the dormitories of senior high school

students Free lunch for all students in poverty blocks

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Year

National Rural Average Poor Counties

Age 7—15

Of whichAge 7—15

Of which

Girl Age7—12

Age13—15 Girl Age

7—12Age13—15

2002 94.4 93.5 96.2 92.3 91.0 89.2 94.9 85.4 2003 95.8 95.3 97.4 93.9 92.2 91.0 95.2 88.4 2004 97.3 97.1 98.5 95.9 93.5 92.8 95.8 90.7 2005 97.2 97.1 98.5 95.5 94.6 94.1 96.9 91.7 2006 98.3 98.4 99.2 97.3 95.3 95.1 97.0 92.9 2007 97.4 96.9 98.2 96.6 96.4 96.3 97.7 94.4 2008 97.6 97.7 97.2 98.1 97.0 96.7 97.9 95.7 2009 97.9 97.9 97.8 97.9 97.4 97.2 98.2 96.2 2010 98.0 98.1 97.7 98.6 97.7 97.6 98.3 96.82002-2010 3.6 4.6 1.5 6.3 6.7 8.4 3.4 11.4

Table 5 Change in Schooling rate in Poor Counties over 2002-2010（%)

IMPROVING THE ACCESS OF THE POOR TO SOCIAL SERVICES

Medical care Improving access and affordability of

the poor by establishing rural cooperative medical care insurance system, covering all rural residents

Improving clinics in poor villages, 94% villages with clinics

Training of the doctors in poor rural areas

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SOCIAL SECURITY SYSTEM ESTABLISHED FOR PROTECTING THE VULNERABLE FROM FALLING IN POVERTY

Rural Minimum living allowance scheme

Adopted nationwide since 2007 50 million rural residents benefitted Funded by central and local GOV’T,3/4 by

central GOV’T Lower and varied thresholds Leakage of real poor and spill-over of

resources

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Rural social pension insurance scheme

Piloted in 2009 and covered all counties by the end of 2012

Jointly funded by individuals, local and central GOV’T

Lower standards and full coverage

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Program for supporting the aged and orphans without family’s supporting

One social security of long history started in 1950’s

Combining financial supports with income from land utilization

Direct assistance and relief system Medical assistance to those suffered

serious illness Assistance to the poor children for

education

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PARTICIPATION OF ALL CONCERNED ACTORS

Government plays dominated roles Establishing leadership for poverty

reduction The leadership group for poverty alleviation

established from central down to townships Offices and staffs designated in each level of

GOV’T Integrating poverty reduction into national

development planning Making strategies and policies for poverty

reduction Allocating special funds Mobilizing participation of departmental and

local GOV’T governments Responsibility system for poverty

reduction

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PARTICIPATION OF ALL CONCERNED ACTORS

Private sector makes largest contribution by creating jobs, taxes, and providing direct assistance

Civil organizations work in social mobilization, innovation of poverty reduction ways

International organizations brought in new ideas and knowledge

Empowerment to the poor participation of the poor in project

planning, implementation, and M&E Allow the poor make their own choices

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IMPROVEMENT IN MANAGEMENT EFFECTIVENESS

Attention drawn to improving governance, accountability of the management of poverty intervention projects and fund delivery, utilization

institutionalizing transparent and participatory planning , implementation, and M&E

Efforts made to improve the effectiveness and targeting of poverty reduction projects

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PROCESS AND DYNAMICS OF INNOVATIONS IN POVERTY REDUCTION IN CHINA

Learning from outside and the past Pilot first, and upscale the

effective ones Listening to the grassroots (incl.

NGOs and communities) . But It takes time

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LESSONS LEARNED Pro-poor growth pattern and strategy Pay more attention to the social

development of the poor Targeting poverty intervention, when

possible Participation of all actors in poverty

reduction Pilot first, scale up Management matters in poverty

reduction Right direction is more important

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china's lessons in poverty reduction

Economy & Finance