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Rural Poverty Reduction in China

Rural Poverty Reduction in China. The State Council Leading Group Office of Poverty Alleviation and Development, China 2010.09.16. outline. 1 China’s success against poverty 2 Factors behind China’s success poverty reduction story 3 Methods for “development oriented poverty reduction”

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Rural Poverty Reduction in China

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  1. Rural Poverty Reduction in China The State Council Leading Group Office of Poverty Alleviation and Development, China 2010.09.16

  2. outline 1 China’s success against poverty 2 Factors behind China’s success poverty reduction story 3 Methods for “development oriented poverty reduction” 4 Challenges faced by China’s poverty reduction 5 Thought for the next step

  3. 1 China’s Success Against Poverty Through the 31 years after the reform, poverty reduction in China achieved world renowned success （1）Poor population substantially reduced （2）Rural household income increased （3）Infrastructure dramatically improved （4）Social development boosted （5）Regional economic development accelerated 3

  4. 1 China’s Success Against Poverty • Poor Population substantially reduced • Rural absolute poorpopulation has been reduced from 250 million in 1978, to 14.79 million in 2007, its share in rural population reduced from 30.7% to 1.6% • Rural lower incomepopulation reduced from 62.13 million in 2000 to 28.41 million, its share in rural population reduced from 6.7% to 3% 4

  5. 1 China’s Success Against Poverty Dropping number of absolute poor and poverty incidence Number of absolute poor（10,000 persons） Absolute poverty rate（%）

  6. 1 China’s Success Against Poverty Poverty incidence of China: proportion of poor population under different poverty lines 90 80 70 $ 1.25 International poverty line 60 50 40 30 $ 1.08 poverty line 20 10 Poverty line set by the Chinese government 0 1981 1984 1987 1990 1993 1996 1999 2001 2005 2007

  7. 1 China’s Success Against Poverty （2）Rural household income increased • From 1989 to 2008, per-capita net income for rural household in the nationally focused poverty counties increased from 303 Yuan to 2611 Yuan • From 2003 to 2007, net income for rural household in the nationally focused poverty counties increased from 1305Yuan to 2278 Yuan, with five-year average annual growth of 9.04%, continuously higher than the national average growth of 7.47% in five consecutive years

  8. 1 China’s Success Against Poverty Net income growth rate for rural households in the nationally focused poverty counties continuously higher than the national average in last five years （%）

  9. 1 China’s Success Against Poverty （3）Rural infrastructure dramatically improved Changes in the poor natural villages in nationally focused poor counties from 2002 to 2008 • Road access 72.21% → 84.4% • Electricity 92.79% → 96.8% • Telephone 52.39% → 87.5% • Television and radio 83.68% → 92.9% 9

  10. 1 China’s Success Against Poverty Rural infrastructure dramatically improved

  11. 1 China’s Success Against Poverty （4）Social development continues to grow • Implementation of the nine-year compulsoryeducation • Participation ratio of new rural cooperative medical system reaches 91.5% • Minimum living allowance system in rural areas

  12. 1 China’s Success Against Poverty From 2002 to 2008 • Villages with kinder garden and pre-school education increased from 7.38% to 55.2% • Villages with rural medical facilities increased from 9.86% to 77.4% • Villages with qualified rural doctors and sanitary staff increased from 10.18% to 77.4% • Villages with qualified midwife increased from 9.58% to 73.7% 12

  13. 1 China’s Success Against Poverty

  14. 1 China’s Success Against Poverty （5）Regional economic development accelerated • From 2000 to 2008, the per-capita GDP of 592 nationally focused poor counties increased from 2500 Yuan to 8368 Yuan, with an annual increase of 22.2%; the per-capita local fiscal budgetary revenue increased from 116.5 Yuan to 354.3 Yuan, with an annual increase of 24.5% • Some resource giants, tourism giants and counties with successful industrial structure adjustment realized extraordinary development. The per-capita GDP of 37 counties and per-capita fiscal revenue of 61 counties exceeded the average of total 2072 counties

  15. 1 China’s Success Against Poverty Numbers of Poor by Region1981-2005 (WWW.WORLDBANK.ORG.CN)

  16. 1 China’s Success Against Poverty Proportion of people living under $1 per day

  17. 1 China’s Success Against Poverty Contribution to the world poverty reduction • Based on the Chinese poverty line, rural absolute poor has been reduced from 85 million (9.6% of rural population) in 1990 to 14.79 million (1.6% of rural population) in 2007. China is the first developing country reaching the poverty reduction target of MDGs. Even if applying the international poverty line of $ 1 per person per day adopted by MDG, the proportion of rural poor has been reduced from 46% in 1990 to 10.4% in 2005. This also testifies the realization of China for accomplishing poverty reduction task within the MDG context • From 1990 to 2005，the world population living under the $1 /per day has been reduced to 1.4 billion with a reduction of 418 million (23% reduction). The world poor population has increased by 58 million if China is excluded. (“China’s Progress Towards the MDGs” jointly drafted by the Ministry of Foreign Affairs, China and UNDP) 17

  18. 1 China’s Success Against Poverty World Bank Assessment Report(March,2009) • In the first half of the 11th Five-Year Plan, poverty continued to drop dramatically. It is estimated that the proportion of the population living under the World Bank poverty line in China reduced from 10.3% in 2004 to 4.0% in 2007 (the figure for rural areas was 5.4%)

  19. 2 Factors behind China’s Success Poverty Reduction Story （1）Reform and opening-up policy, institutional innovation （2）Economic growth, strengthened economic basis （3）Integrated urban and rural development, policy of feeding back to agriculture （4）Development oriented poverty reduction and self reliance 19

  20. 2 Factors behind China’s Success Poverty Reduction Story （1）Reform and opening up policy, institutional innovation Poverty is not socialism！ InDecember 1978, the 3rd Plenary Meeting of the 11th Central Committee of CCP, confirmed the strategic decision to shift to economic development 20

  21. 2 Factors behind China’s Success Poverty Reduction Story （group photo of people who took the lead in “Dabaogan”-all-round responsibility system） 1978:Institutional reform driven poverty reductionintroduce reform and opening up policy, scrap people’s commune, establish household responsibility system 1986:Specific plans driven poverty reduction identify development based poverty reduction principle, “turning blood transfusion to blood creation”, build the poor’s self development capacities. 2002:Integrated urban rural poverty reduction strategy economicdevelopment, rural urban development is coordinated, a grand poverty reduction structure has taken shape.

  22. 2 Factors behind China’s Success Poverty Reduction Story 2007: “two-wheel ” mode for poverty reduction • set up minimum living allowance system • Adjust poverty line • Implement two wheel mode for poverty reduction

  23. 2 Factors behind China’s Success Poverty Reduction Story （2）Economic growth and infrastructure development • An average annual growth of 9.8% from 1978 to 2007 • Fiscal revenue exceeded 6 trillion Yuan, and the per-capital GDP reached $2770 • Provide numerous employment opportunities (including developing township enterprise, over 200 million rural labors took off-farm work • Agricultural infrastructure strengthened with outputs increased remarkably, feed 22% of world population with 9% land and 6% water resources, meet basic needs for food • Create conditions for structural adjustment (including returning the farmland to forest and ecological construction)

  24. 2 Factors behind China’s Success Poverty Reduction Story Relations between Economic Growth and Poverty Reduction • Economic growth is critical to the success of China’s poverty reduction. During 1981 to 2005, the poverty rate reduced by 9% for every 10% per-capita GDP increase

  25. 2 Factors behind China’s Success Poverty Reduction Story

  26. 2 Factors behind China’s Success Poverty Reduction Story （3）Integrate urban-rural development and implement the policy of feeding back to agriculture • Four kinds of subsidies, four kinds of reductions or remission • Regulation for minimum purchasing price • Rural infrastructure construction (road, water, electricity and gas) • Social development for rural (education, health) • Minimum living allowance system in rural areas （+pension） alleviate burdens of 130 billion Yuan + subsidies of 120 billion Yuan = 250 billion Yuan (268 Yuan per capita based on 930 million rural population equivalent to 34.1% of the absolute poverty line in 2007 (785 Yuan) minimum living allowance budget for 2009 is 20 billion Yuan, 464 Yuan per capita based on 43.05 million population in 2008, accounting 59.1% of the 785 Yuan 26

  27. 2 Factors behind China’s Success Poverty Reduction Story • Development of the West Regions, revitalization of Northeast China, rise of central China, promoting balanced development among regions

  28. 2 Factors behind China’s Success Poverty Reduction Story Fiscal fund from central government for agriculture（100 million Yuan） 2009年是2002年的3.76倍

  29. 2 Factors behind China’s Success Poverty Reduction Story （4）Development oriented poverty reduction and self reliance • Economic growth can drive the development of the poor areas, but won’t benefit the poor by itself • Relief can maintain the subsistence of the poor, but won’t improve the poor’s capacity for development Persist the principle of development oriented poverty reduction Unshakable and irreplaceable 29

  30. 2 Factors behind China’s Success Poverty Reduction Story Principle of development oriented poverty reduction • Necessary national assistance and support • Self-reliance and hard working • Improve development capacity The fundamental way of casting off poverty The long-standing basic principles of poverty reduction

  31. 2 Factors behind China’s Success Poverty Reduction Story Increasing of the central government fund for poverty reduction （1986－2009）

  32. 2 Factors behind China’s Success Poverty Reduction Story Government Input in poverty reduction • The specific central budget for poverty reduction from 1980 to 2009accumulated to 191.719billion Yuan • Interest subsidized loans for poverty reduction from 1980 to 2009 accumulated to 228.842billion Yuan

  33. 2 Factors behind China’s Success Poverty Reduction Story Yearly investment on poverty reduction

  34. 3 Main approaches for development oriented poverty reduction （1）Government initiative （2）Social participation （3）Self reliance （4）Development based poverty reduction （5）Scientific development 34

  35. 3 Main approaches for development oriented poverty reduction Government initiative Main approaches Specific poverty reduction program1983 Poverty reduction in fixed areas1986 The counterpart support system between the east and west1996 Including all government department in poverty reduction program 2002 Main features Improve institution Formulate plans Set out regions Define standard Fiscal support Interest subsidized loan Decentralized responsibility to provincial government (task, responsibility, fund And management)

  36. 3 Main approaches for development oriented poverty reduction All society participation • SOEs and private enterprises • Universities, research institutions • Military and all social parties • International cooperation

  37. 3 Main approaches for development oriented poverty reduction Self reliance • Not just waiting and relying on others rather painstaking work than going through endurably • Participatory poverty reduction self awareness and self management • Organizational innovation improve the productivity of the poor

  38. 3 Main approaches for development oriented poverty reduction Development oriented poverty reduction • Improve the basic living and production conditions (comprehensive village development, poverty reduction through relocation program) • Improve the labor skills of the poor (the “rain and dew plan”) • Increase income by improving productivity (poverty reduction through agricultural industrialization)

  39. 3 Main approaches for development oriented poverty reduction Scientific development • Reducing the number of the poor and narrowing the gap • Improving the conditions and enhancing the capacity • Balance the economic and social development • Exploiting resources and protecting environment • Based on rural areas and integrating urban and rural areas

  40. 4 Challenges faced by poverty reductionin China （1）Large scale （2）Gravity of poverty （3）Return to poverty phenomenon （4）Income gap 40

  41. 4 Challenges faced by poverty reductionin China (1) Large scale New poverty line implemented by the Chinese government since 2008, increased to 1196 Yuan with coverage of 40.07million people The new poverty line, approaching $1 a day per person 41

  42. 4 Challenges faced by poverty reductionin China （2）Gravity of poverty • In some poor areas with special types (northwest dry and desert regions, Qinghai-Tibet Plateau,lava regions, Qinba mountain area, border poor areas,Wenchuan earthquake area), the poverty incidence still stands at 30 - 40%，there is much to do with infrastructure • Proportion of the poor in the minority autonomous regions increased to 52 - 53% • Revolutionary base areas, minority areasand border areas face an arduous task of poverty reduction

  43. 4 Challenges faced by poverty reductionin China (3) Return to poverty phenomenon • Among the 40.07 million Chinese poor population, two thirds on the verge of returning to poverty again • Chinese poor areas are 5 times more prone to disaster damage than the national average • Returning to poverty are caused by complicated factors and it has become an outstanding problem 43

  44. 4 Challenges faced by poverty reductionin China Decreased crops from disasters

  45. 4 Challenges faced by poverty reductionin China Global financial crisis and the implications of economic recession • Some coastal export enterprises suspend or partially suspend production, employment dislocation, migrant workers from poor regions return to their home • Price of agricultural products reduced (cotton, potato, apple, orange, etc.), affecting the resource advantage of some poverty counties • Leading enterprises lose orders • The impact of the crisis on the poor regions can’t be underestimated

  46. 4 Challenges faced by poverty reductionin China Impact of the 2008 financial crisis on the poor region Table 1 a comparison of the per-capita income increase from 2003 to 2008 between the nationally focused poverty counties and the national average

  47. 4 Challenges faced by poverty reductionin China Net income growth rate for rural households in the nationally focused poverty counties higher than the national average in last 5 years （%） （年份）

  48. 4 Challenges faced by poverty reductionin China Table 2 a comparison of the growth rate of the composition of the rural per-capita net income 2008 between the Nationally focused poor counties and the national average

  49. 4 Challenges faced by poverty reductionin China Table 3 increase of the wages income of the nationally focused poverty counties from 2007 to 2008

  50. 4 Challenges faced by poverty reductionin China Nationally focused poverty counties (1)in the first half of 2009 • Farmers’ cash income reached 1392 Yuan, an increase of 119 Yuan compare to the same period of last year, nominal increase of 9.3%, or real increase of 9.5% on inflation-adjusted basis, holding steady with the same period of the previous year. 1.4% higher than the national average • Excluding the lump-sum subsidy issued by the government for Wenchuan earthquake, the increase of the cash income for the first half of the year was 8.7%, an increase of 0.6 % from the same period of the previous year

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