China's Poverty Alleviation

istorical Background of Poverty in China

Despite China's current status as a global economic power, it was once a nation where the majority of the population lived in extreme poverty. Through governance under the Communist Party of China (CPC) and a series of economic reforms, China has successfully transformed itself. According to the World Bank, 800 million people have escaped poverty due to these initiatives.

Defining Poverty and Economic Growth

Poverty can be measured in different ways, but the National Bureau of Statistics defines it as a state where individuals or families cannot afford basic survival needs and have limited labor force reproduction. As China's GDP increased, the absolute poverty rate declined. However, economists argue that China remains a developing country due to its low Gross Domestic Product per capita (GDPR). The disparity between urban and rural incomes has been a significant factor in this. For example, in 2009, rural per capita income was only $758, just 30% of urban income levels (Chen, Chen, Yokogawa, & Yabe, 2011).

Sources of Poverty in China

Environmental Factors: Research by Wang Sangui and Chen Nanyue identifies environmental factors as a major source of poverty, particularly in rural areas. Land infertility and natural disasters significantly impact income levels, creating long-term economic difficulties.

Educational Inequality: Zhang Jinhua argues that the increasing cost of education and an oversaturated job market have contributed to poverty. As educational expenses rise, families struggle to secure returns on investment, leading to financial strain.

Health Issues: Poor health is a critical factor in poverty. Medical expenses and loss of work capability place a significant burden on families, often resulting in severe debt and long-term income loss.

Institutional Factors: He Huichao and Huang Shao’an highlight the role of institutional poverty, which arises due to inadequate social security, weak employee rights, taxation policies, and inefficient property registration systems. These structural issues fail to provide adequate financial protection for citizens.

China's Poverty Alleviation Strategies

China’s approach to poverty alleviation has been multifaceted, focusing on rigorous identification processes, strong government leadership, and collaboration across various levels of governance. The key strategies include:

Agricultural and Economic Reforms: Starting in 1978, China transitioned from collective farming to a household contract system, boosting agricultural productivity. The liberalization of agricultural prices and the creation of market mechanisms further improved economic conditions, reducing the poverty rate from 30% to 15% by 1985 (Yan, 2016).

State-Led Programs: The government established the State Council Leading Group on Economic Development in Poor Areas in 1986, emphasizing human capital development and industrial growth. By 1993, the rural population unable to afford basic needs had decreased from 125 million to 80 million (Rong, 2004).

Fiscal Reforms and Targeted Plans: In 1994, China introduced the "National ‘Eight-Seven’ Poverty Alleviation Plan," which aimed to increase rural income, improve agricultural productivity, and enhance access to education and healthcare. By 2000, these initiatives had significantly reduced poverty levels (The Administrative Center for China’s Agenda 21, n.d.).

Role of the Government and Funding

The Chinese government played a crucial role in poverty reduction through targeted financial and social programs. Despite limited financial resources, poverty alleviation funding increased from ¥9.79 billion in 1994 to ¥24.81 billion in 2000. The total investment from 1986 to 2000 reached ¥112.7 billion (SCIO, 2021).

From 2001 onward, the government expanded its efforts to include social services such as education, healthcare, and social security. Free textbooks and living subsidies were introduced for poor rural students, and the new rural cooperative healthcare system improved access to medical services. Infrastructure investments further enhanced the quality of life in impoverished regions.

Targeted Poverty Alleviation Program (TPA)

Launched in 2012, the TPA program focused on personalized poverty eradication strategies through the slogan “one income, two assurances, and three guarantees.” A workforce of over 2 million party cadres was mobilized to collect and verify data, while 3 million party officials were sent to live in poor villages to assist households directly. Special programs targeted women, with ¥450 billion in small loans and microcredit benefiting 8.7 million women entrepreneurs (SCIO, 2021).

The Minimum Living Guarantee System (Dibao)

The Dibao system, introduced in Shanghai in 1993, provided financial assistance to low-income citizens. By 2014, there were 70.84 million beneficiaries, with the total expenditure reaching ¥159.20 billion. The annual allowance per beneficiary grew from ¥2,068 in 2012 to ¥5,962 in 2020 (MOCA, 2015).

Funding and Financial Support for Poverty Alleviation

China’s poverty alleviation efforts have been primarily funded by government resources at both central and local levels, as well as affiliated programs. Other funding sources include private sector contributions and special government-organized initiatives such as the "welfare lottery." From 2013 onward, the government invested ¥1.6 trillion directly in poverty alleviation, while loans worth ¥9.2 trillion were provided for targeted poverty alleviation projects. The total expenditure reached nearly ¥14 trillion (SCIO, 2021).

The Ideology of "Common Prosperity"

The concept of "common prosperity" was introduced by Chairman Mao Zedong in the 1950s and later revived by Deng Xiaoping in the 1970s. President Xi Jinping further strengthened this ideology through a large-scale mass mobilization campaign that involved the participation of citizens, businesses, and academic institutions. In 2021, China officially announced the elimination of extreme poverty. Moving forward, the government aims to achieve equal access to basic public services by 2035 and full common prosperity by 2050.

Conclusion

China’s poverty alleviation journey is a testament to strategic planning, strong governance, and targeted economic reforms. Through a combination of financial investment, social programs, and institutional reforms, China has not only eradicated extreme poverty but has also set a precedent for sustainable economic development. Moving forward, continuous monitoring and policy adjustments will be crucial to maintaining these achievements and ensuring inclusive growth for all citizens.

References:

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