Chinese and Foreign Joint Research Theme Report
China’s Poverty Alleviation: Ideals, Practices and Implications to the World
Cai Fang
Researcher, Chinese Academy of Social Sciences; President, National Institute for Global Strategy, Chinese Academy of Social Sciences
Since the reform and opening up, the Chinese government has implemented specific strategies for the rural poverty alleviation and development. As the development stages and the nature of poverty change, the focus on poverty-stricken groups is adjusted accordingly with the times, which has broken the myth of the diminishing marginal effect of poverty alleviation and helped make remarkable achievements in poverty reduction.
1 Poverty is not socialism
Deng Xiaoping once suggested that poverty is not socialism. Obviously, the original intention to lift the Chinese people out of poverty and continuously improve their living standards has become the gene of reform and opening up from the very beginning, as well as a thread running through the whole process. Since the 18th National Congress of the Communist Party of China, socialism with Chinese characteristics has entered a new era. As the cornerstone of Xi Jinping’s economic thought on socialism with Chinese characteristics for a new era, adhering to the people-centered philosophy of development stipulates that people are not only the main body of reform and development, but also that of sharing and the ultimate beneficiary.
First of all, one of the most thorough reforms in rural areas is to abolish the people’s commune system lasting for more than two decades. With the rapid nationwide implementation of the household contract responsibility system, the village committee was officially defined as the villager autonomous organization in the Constitution of the People’s Republic of China revised at the end of 1982; in 1983, the Central Committee of the Communist Party of China and the State Council issued a notice （《关于实行政社分开，建立乡政府的通知》）， requiring the separation of government administration from commune management and the establishment of township governments. Correspondingly, administrative villages were set up at the level of former production brigades and villagers’ groups on the basis of production teams. The rural villagers’ autonomy system and the basic rural operating system with the household contract responsibility system as its core, have fundamentally stipulated the farmers’ right to independently allocate production factors under the premise of collective ownership of land, and reform achievements have proved beneficial in an overall and long-term manner.
Secondly, the policies restricting the allocation of labor force have been gradually loosened, and the barriers to its transfer between the three industries and between urban and rural areas have also been removed successively. The rural labor force transferred from single food crops growing to a diversified economy, from single crop farming to an all-round development of agriculture, forestry, herding, side-line production and fishing, from agriculture to township enterprises featuring “departing farming without leaving native land”, and then entered small towns and large and medium-sized cities engaging in non-agricultural employment. Just as in the implementation of the household contract responsibility system, the wording “can” in the Party Central Committee documents played a key role （such as “can fix farm output quotas on each household”）, and the removal of system’s impediments to labor mobility was also reflected in a series of “allow” policies. For example, since 1983, farmers were allowed to engage in the long-distance transport, vending and self-marketing of agricultural products, breaking through the geographical restrictions of employment for the first time. In 1988, farmers were allowed to work in neighboring towns with their own rations and the dichotomy of urban and rural employment was first overcome. In the early 1990s, as the ticket system such as food coupons phased out, the transferred rural labor force was in fact “allowed” to live and work in towns at all levels.
Thirdly, the household registration system and a series of relevant institutional reforms have been phased in, resulting a wider range of labor transfer and mobility. This kind of reform mainly manifested itself in two aspects: first, the reforms of the state-owned enterprises and urban employment system have promoted the development of the labor market; second, the urban-rural social security system based on the household registration has gradually turned integrated and equalized. In hindsight, there is a clear logical main line in the process of the above-mentioned reforms, that is, the rural surplus labor force and the redundant employees in urban enterprises were withdrawn from the inefficient allocation, flowed between urban and rural areas, between regions, between industries, and between enterprises as reallocation, and entered the areas with higher productivity, transforming the demographic dividends into the high-speed economic growth through factor accumulation and resource reallocation. A study shows that, among the 16.7 times labor productivity （GDP per labor force） growth from 1978 to 2015, 44% comes from this kind of reallocation of labor resource.[1]
2 The poverty reduction practice and its effects in the reform period
The implementation of specific poverty reduction strategies is indispensable for achieving sharing and poverty reduction goals. In the context of the 40 years of reform and opening up, China’s rural poverty reduction can be observed in three stages, including the undeclared real poverty reduction process and the clearly announced implementation of the poverty reduction strategies.
The first stage of poverty reduction, a period from the early 1980s to the mid-1980s, saw no clearly announced poverty reduction strategies. The comprehensive reform of the rural economic system served as the main driving force for the rapid development of the rural economy and the national economy during this period; meanwhile, the overall rural income growth became the main factor for poverty reduction. The reform of the basic rural management system, which has greatly aroused farmers’ initiative for production, coupled with the rise in agricultural product price, the acceleration of the agricultural structure adjustment and the rural industrialization, has enhanced the vitality of the rural economy in an all-round way and has created more opportunities for a group of rural laborers endowed with higher human capital to broaden their channel of employment and shake off poverty to get rich.
During the period from 1978 to 1985, the national agricultural added value increased by 55.4%, the agricultural labor productivity 40.3%, and the comprehensive agricultural product purchase price index 66.8%. In the same period, with the rapid growth of various agricultural products, the per capita net income of farmers increased by 2.6 times and their per capita calorie intake rose from 2,300 kcal per person per day in 1978 to 2,454 kcal in 1985. At the same time, as the poverty standard doubled, the rural population living below the absolute poverty line fell from 250 million to 125 million, 14.8% of the total number in the rural areas; the average poverty population decreased by 17.86 million each year.
The period, from the mid-1980s to the end of the 20th century, can be viewed as the second stage of the poverty reduction, as well as the beginning of the officially announced poverty alleviation strategy. The government set up specific poverty reduction agencies, arranged special funds through multiple channels, formulated relevant preferential policies, and thoroughly replaced the traditional relief poverty alleviation with a development-oriented one. The planned and organized development-oriented poverty alleviation was carried out in a large scale through a series of policies and measures. The poverty alleviation at this stage can be seen as the government’ efforts targeting at the specific groups in rural areas. There are two pieces of special experience worth pointing out.
First, after establishing the overall idea of regional development-oriented poverty alleviation, the central government identified a number of poverty-stricken counties with national key support by setting uniform standards so as to intensively use poverty alleviation funds and effectively support the poor population. According to the standard, the per capita net income of farmers in 1985 at county level below 1,150 yuan, one year later, the government identified 592 poverty-stricken counties with national key support, accounting for nearly one-fifth of all the county-level administrative units. Since then, with the economic development, especially that in poor areas, the standard of poverty-stricken counties was also adjusted in time.
Second, China formulated and issued the 8-7 National Plan for Priority Poverty Reduction in 1993. This plan concentrated on the 80 million poor population in rural areas throughout the country at that time and strived to solve their problem of food and clothing. With special efforts, this plan took advantage of the strong mobilization and high consensus in Chinese society, aiming to achieves the maximum poverty alleviation effect in a short period of time. In the three years from 1997 to 1999, each year eight million poor people overcame the problem of food and clothing at the highest speed of poverty reduction in rural areas since the 1990s, pushing this round of poverty alleviation to a climax. The implementation of the plan showed that in the past seven years, the rural poverty population decreased by 50 million, and the rural poverty rate dropped from 8.7% to 3.4%. From 1986 to 2000, the per capita net income of farmers in poverty-stricken counties with national key support rose from 206 yuan to 1,338 yuan, and the number of poor people in the country were reduced from 131 million to 32.09 million. The concentrated poverty areas witnessed the development of various social undertakings. For example, through the efforts in this period, the owing rate of infrastructure such as transportation, communications, electricity, and school approached that in non-poor areas. With the completion of the 8-7 National Plan for Priority Poverty Reduction and the accomplishment of the main expected goals, the government’s poverty alleviation strategy entered the third stage since 2001.
From 2000 onward, the poverty incidence in rural areas basically remained at the same level, and the total number of people shaking off poverty in the following 10 years reached 5.21 million. Given the country’s annual growing investment in poverty alleviation, the regional development plan was not as effective as before. Long-term poverty caused by natural conditions such as geography and climate, as well as family and individual abilities, marks the main feature of rural poverty – marginalized poverty. In 2001, the Party Central Committee and the State Council formulated and issued the Outline for Development-oriented Poverty Reduction Program for Rural China （2001-2010）. A notable feature in this “Outline” is to alleviate poverty in each village, with a corresponding measure known as the “poverty alleviation strategy based on whole village advancement”. Since 2001, in accordance with the economic and social indicators in terms of production, living and geographical environment, a working policy on the basis of county level unit and poor rural areas was implemented, and key poverty-stricken villages have also been identified except for poverty-stricken counties. Apart from poor counties, a total of 148,000 key poor villages were identified nationwide. In this way, it not only aimed at the poor areas, but also differentiated the poor groups in a more detailed manner, improving the efficiency of targeted poverty alleviation.
The whole village advancement of poverty alleviation during this period achieved remarkable results. In the implementation of the Outline, the income growth rate of farmers in key poverty alleviation villages greatly exceeded the rate on average in poverty-stricken counties, as well as the national average level. Among all the poor villages, the income growth of farmer households that implemented the whole village advancement was 8%-9% higher than those did not do so. During this period, various social undertakings in poverty-stricken areas have also made great progress. Besides, the productive infrastructure and living service facilities in poor villages saw significant improvement, and the increase in relevant indicators was much higher than the average level of poor counties.
With the further decrease of the national poor population by the end of 2010 and the realization of the United Nations Millennium Development Goals to reduce the poor people by half, China immediately implemented the Outline for Development-oriented Poverty Reduction Program for Rural China （2011-2020）, giving priority to the contiguous special poor areas identified as the key to poverty alleviation and providing more effective policy and financial support for these areas. At the same time, raising the poverty alleviation standard above the international one, the government showed its strengthened responsibility, with more low-income people in rural areas were included and greater support to poor areas and population were provided.
Since the 18th Congress of the Communist Party of China, China has strengthened its efforts to implement the poverty alleviation project with the attitude towards a new critical battle to put forward targeted poverty alleviation and classify poor families, and made new achievements in this field. Under the higher poverty standard, the rural poor population decreased from 122 million in 2011 to 43.35 million in 2016, an average reduction of 15.81 million each year, breaking the “law” of the diminishing marginal effect of poverty alleviation. The 13th Five-Year Plan, implemented since 2016, has set a more ambitious goal for poverty alleviation, that is, based on the current poverty standard adjusted according to the factors such as price, the rural poor people with a per capita annual income below 4,000 yuan and all the poverty-stricken counties will be lifted out of poverty so as to eliminate the regional poverty in 2020. In fact, 28 poverty-stricken counties shook off poverty through legal procedures in 2016, achieving the zero breakthrough in the withdrawal of such counties, marking a good start for the poverty alleviation goal in 2020.
3 The significance of China’s poverty reduction for the world
Since the reform and opening up, China has not only achieved the world’s fastest economic growth, but also improved the people’s living standards to the greatest extent and the realized the world’s largest poverty alleviation and reduction. In 1978, according to the poverty standard 100 yuan per person per year set by the Chinese government at that time, the rural poor population suffering from the food and clothing problem reached 250 million, accounting for 30.7% of the total number in rural areas. In 1984, the poverty alleviation standard was raised to 200 yuan per person per year, the number of poor people decreased to 128 million, and the poverty incidence fell to 15.1%. Since then, China has begun to implement the poverty alleviation and development strategy. As the poverty standard continues to rise, the number of poor people keeps falling. According to the poverty alleviation standard of 1,274 Yuan in 2010, the number of rural poor people decreased from 94.22 million in 2000 to 26.88 million in 2010. Correspondingly, the poverty incidence dropped from 10.2% to 2.8%.
In 2011, the central government raised the national poverty alleviation standard to 2,300 Yuan based on the 2010 constant price, 92% higher than that in 2009. The introduction of this new standard has expanded the number or coverage of the nationwide poor people from 26.88 million in 2010 to 128 million. According to the internationally comparable purchasing power parity, the standard means $1.8 dollars per person per day, exceeding the international one of $1.5 dollars set by World Bank in 2008. Under this new standard, the rural poor population continued to decline substantially. In the government work report of the National People’s Congress in 2018, Premier Li Keqiang pointed out that, from 2012 to 2017, there were more than 68 million rural poor people lifted out of poverty, and the poverty rate fell from 10.2% to 3.1% based on the new standard. The great achievements of China’s poverty alleviation and development, as well as the overall completion of the Millennium Development Goals ahead of schedule have won the unanimous praise from the international community. It is widely believed that the achievements of China’s poverty alleviation have profoundly affected the international community, which have not only directly made quantity contributions to the global poverty reduction, but also have provided a model for developing countries and even the entire world to learn from. From 1981 to 2013, the absolute poverty population in the world defined by World Bank, namely one with a daily income below 1.9 international dollars （constant price in 2011）, decreased from 1,893 million to 766 million, while that figure in China was reduced from 878 million to 25.17 million at the same time, and that is to say, China’s rate of contribution to global poverty alleviation is 75.7%. It means that China has significantly contributed to the international poverty alleviation and development, as well as to the human civilization and progress.
The useful knowledge and ideas proven by practice are a specific type of public goods. Therefore, raising China’s successful practical experience or Chinese stories to Chinese wisdom for developing countries in the form of a Chinese plan and a possible choice for development path, should undoubtedly become the main way for China to make greater contributions to mankind. Obviously, the most incontrovertible Chinese wisdom is reflected in China’s successful experience of poverty reduction.
In the practices of poverty alleviation of countries around the world, researchers and practitioners have generally observed a kind of diminishing marginal effect, even known as a “law” by someone, that as poverty alleviation puts forward, the number of poor people also falls, but the final remaining small-scale poor groups are much more difficult to shake off poverty due to their geographical concentration in areas with poor ecological, production and living conditions and their demographic characteristics of insufficient labor capacities such as disability, disease, senility, and low educational level. Therefore, it is of great difficulty to get through the last kilometer of poverty alleviation. As a result, most developing countries and even many developed countries, have failed to take this stubborn stronghold of poverty. From the practice of poverty alleviation since the reform and opening up, the continuous reduction of the rural poor population in China has also kept encountering the diminishing marginal effect. Poverty alleviation is an investment in people, different from general investment activities and thus does not follow the law in the field of material investment. From 2010 to 2017, the scale of the central government’s poverty alleviation funds was still expanding at an average speed of 21.3% each year. The “law” of the diminishing marginal effect of poverty alleviation does not work in China. China’s poverty alleviation achievements and its main experience are as follows:
First of all, give full play to the advantages of the whole national system, maximize the mobilization of social forces, and realize the all-round poverty alleviation in the whole society. As early as the mid-1980s, a standing leading institution for poverty alleviation was set up at the central government level. Poverty alleviation not only becomes an established strategy to be consistently implemented, but also has its unique key tasks and objectives at each stage in the form of the 8-7 National Plan for Priority Poverty Reduction and the ten-year Outline for Development-oriented Poverty Reduction Program for Rural China. Specific poverty alleviation funds have been included in the central and provincial government budgets, and the total scale has been continuously expanding. In addition, the establishment of social protection mechanisms such as the system of subsistence allowances for urban and rural residents and the social assistance, as well as of the development of philanthropy and the improvement of counterpart poverty alleviation mechanisms, have formed the complementary relationships and work synergies with the poverty alleviation strategies. Since the reform and opening up, especially the 18th National Congress of the Communist Party of China onward, mobilizing the entire party and the whole country and adhering to the targeted poverty alleviation have become a social intervention experiment drawing world attention.
Secondly, as the stages of economic development change, the priorities of poverty alleviation are constantly adjusted, and the policies and measures focus more on the poor population. With the poor people moving from the widespread distribution to the increasingly concentration in vulnerable areas and disadvantaged families, the poverty alleviation strategies also experienced a corresponding shift from the initial implementation of the regional development poverty alleviation strategy to the identification of the poverty-stricken counties with national key support, to the confirmation of the poor villages with key support and the implementation of poverty alleviation strategy based on whole village advancement and to the building of the file cards for each poverty-stricken family with the assistance measures accurate to individuals. Targeting at the marginalized poverty population under different circumstances, the government helps shake off poverty through policies such as supporting production and employment, relocation and settlement for migrants, the subsistence allowance as safety net, and medical assistance. In addition, the regional coordinated development strategies, such as the West Development Strategy implemented since 2000, have removed the barriers to poverty alleviation for the rural poor population from a macroscopic perspective of regional development, including human capital, infrastructure, and systems and mechanisms.
Finally, the experience and lessons learned at each stage will be applied to the new stages of the poverty alleviation strategies, forming a continuously improved working mechanism. From the view of the overall and final goals, the Chinese government’s poverty alleviation has gone through many hardships as well as achievements, and there are both successful experience and lessons to be learned in the process of exploration.
According to the data from World Bank, there were still 766 million people in the world earning less than $1.90 per day in 2013 （purchasing power parity in 2011）, and 36.4% of these poor people lived in low-income countries where the populations there accounted for 8.4% of all the people. In view of this, the 2030 Agenda for Sustainable Development, issued in 2015, still ranks “to eliminating all forms of poverty in the world” as the top one of the 17 sustainable development goals. Therefore, China’s poverty alleviation practice is undoubtedly a successful exploration of the laws governing the development of human society. The resulting Chinese stories, Chinese wisdom and China’s solutions should become the common spiritual wealth shared by China and developing countries. In the keynote speech at the opening ceremony of the 2017 annual meeting of the World Economic Forum, President Xi Jinping quoted Du Nan, the founder of the International Red Cross: “Our real enemy is not the neighboring country; it is hunger, poverty, ignorance, superstition and prejudice”. For today’s world, this sentence is still clearly targeted.
Translated by Gu Zeqing
[1]Cai Fang, “Effect Analysis of China’s Economic Reform: The Perspective of Labor Redistribution,” Economic Research, No.7 （2007）.