China Sessions Part II: Alleviating poverty – lessons to be learnt

I think China clearly demonstrates that economic growth, and in particular the kind of economic growth that China was able to generate, is the key contributor to poverty-reduction in the first three decades. (File pic shows Shanghai skyline)

I FIRST visited China in 1974 during the disruptive cultural revolution. What I saw then, especially in rural China (incidence of rural poverty, I was told, being 99%) really made me appreciate the good life – even as we knew it then – we already had in Malaysia. Not unlike the rest of the world, ending absolute poverty has been a China dream for centuries.

When Mao Zedong declared in Beijing’s Tiananmen the birth of the New China in 1949, a Herculean task stood before him and the Communist Party of China (CPC) that he led: feeding and clothing 540 million Chinese people, nearly 90% of whom lived in rural areas. Deng Xiaoping, the visionary chief architect of China’s reform and opening-up which began in 1978, made it China’s priority to eradicate extreme poverty.

Over the past eight years, China’s final 98.99 million impoverished rural residents - who were under the current poverty line, have all been lifted out of poverty.

The country has met the poverty-eradication target set in the United Nations’ 2030 Agenda for Sustainable Development, 10 years ahead of schedule.

As I see it, China’s history-making success in poverty alleviation has gone beyond established anti-poverty theories.

It provided fresh perspectives and experiences for the global fight against poverty. Indeed, the recently released Report “Chinese Poverty Alleviation Studies: A Political Economy Perspective”, draws on China’s discourses on poverty alleviation as the ideological and theoretical foundations; decodes the “winning formula” in its anti-poverty fight; explores the rationale behind the fight, and discusses its global implications. China has adopted a series of extraordinary policies and measures, and constructed a whole set of systems covering policy, work and institutions; blazing a poverty reduction path and forming an anti-poverty theory with Chinese characteristics.

A key approach to China’s poverty reduction maintains the goal of national common prosperity; by building a “pro-poor market” in which the government, market and society jointly work to emancipate the productivity of the poor, and make them contributors to growth.

Private enterprises, social organisations and individual citizens are the three new forces of poverty alleviation at work in China; while wealthy locals, migrant workers and businessmen, and college graduates from poor areas in China also played significant roles.

Prioritising development

Calling China a “learner, beneficiary and innovator of global poverty alleviation theories”, the Report reflected foreign experts’ views of Chinese inspirations for the world as the “5Ds:” Determined Leadership, Detailed Blueprint, Development-Oriented, Data-based Governance and Decentralised Delivery.

Meanwhile, China has long prioritised economic development in its poverty fight.

This combines with proactive, precise poverty-reduction practices that directly pass on the benefits of economic development to every poor household, with the view to eliminate poverty completely.

In the fight against poverty, the Chinese government has also attached particular importance to the development of big data and the digital economy, and emphasised the application of advanced digital management, which made China’s success in poverty alleviation possible in a relatively short period of time. The Report attributed the effective implementation of poverty-alleviation policies to the “decentralised” nature of China’s governance structure, featuring many improvisations at subnational levels to implement national policies.

Waging war on poverty

China has achieved its goal of poverty reduction as planned. It lifted close-to 100 million people out of poverty in the past eight years.

It has taken lots of innovative and creative measures to reduce poverty, and has waged a war against poverty of the largest ever scale in mankind’s history.

With eight years of continuous efforts, all rural people (based on the current criteria in China) have been lifted out of poverty. Absolute poverty and overall regional poverty have been eliminated.

As I understand it, the current rural poverty line is 2,300 yuan (US$352 or RM1,443) per person per year at the 2010 price level.

The specific figure is subject to adjustment as the country’s price levels change. In 2019, the poverty line was 3,218 yuan (RM2,062), according to the National Bureau of Statistics.

The great victory in poverty reduction has laid solid foundations for the fulfilment of the first centenary goal – to finish building a moderately prosperous society in all respects by the time the CPC celebrates its centenary in 2021 – and has boosted the people’s feeling of confidence, happiness and safety. The livelihood of the people in poverty-stricken areas has been greatly improved. People have sufficient food and clothing, as well as access to compulsory education, basic medical services and safe housing.

Still, the problem of unbalanced and insufficient development exists in China. It remains an arduous task to consolidate the achievements of poverty reduction.

For China, continuous efforts are needed to help people avoid returning to poverty, with measures such as promoting poverty-reduction industries, improving infrastructure in remote rural areas, expanding markets for rural products, and providing skills training.

Also needed are enhanced management of poverty-reduction funds and assets, help for workers to get jobs near their home, and measures to ensure the people’s basic livelihood.

As I understand it, the Chinese “way” is unique. No doubt, the root of success and the victory over extreme poverty rest on the Party’s leadership and organisational capacity.

Three key factors can be seen in both successes: (i) political commitment of CPC; (ii) implementation programmes and projects (not just give directives or make announcements) through its organisational structure; and (iii) fully mobilised the capacity of the CPC, including commanding personnel and materials.

Understanding how the leadership enabled the fulfilment of the poverty-alleviation mission is especially important. I am told that every poor family in China is “targeted” to be lifted above the line of absolute poverty – that’s millions of poor families with customised plans, each checked monthly, recorded on paper, and digitised for central compilation and analysis.

More than 100 million people have been lifted out of extreme poverty over the past eight years. Every impoverished household is guaranteed help, and every impoverished village has a designated official to carry out targeted measures.

Five levels of local Party secretaries coordinate their roles – provincial, municipal, county, township, village. Third-party evaluations are conducted regularly and randomly to assure accuracy and honesty. That’s a very onerous task.

What then are we to do?

Sure, some important lessons can be learnt from China’s sustained gains in poverty reduction over the past 40 years.

Among them, its reform and opening-up four decades ago, which enabled it to reap “huge gains” in efficiency that drove an increase in incomes for all Chinese.

The second crucial lesson is that while reforms and allowing market forces to play a growing role in the economy were a big part of China’s success, more targeted interventions became necessary.

These focused in particular on the concentration of poverty in rural areas. China’s poverty-relief drive is massive.

In the early 2000s, China started building up a database of up to 150,000 villages (identified as poverty-stricken places) and then policy was directed to help those particular areas.

Over time it became increasingly clear that poverty is no longer a place-related affliction. It has a lot to do with personal household characteristics.

And so, from monitoring places you have to move to monitoring households. I think China clearly demonstrates that economic growth, and in particular the kind of economic growth that China was able to generate, is the key contributor to poverty-reduction in the first three decades.

Then, over the past decade and particularly after 2013, the targeted social policies covered “the last mile” of the poverty-alleviation course. Targeted poverty-alleviation was adopted as a strategy in 2014 to “ensure that assistance reaches poverty-stricken villages and households”.

The policy requires tailoring relief measures to different local conditions. Between 2011 and 2019, China lifted at least 95 million rural residents out of destitution, or more than 10 million people annually, seven years in a row. For China, this is a big deal.

The proportion of poverty in rural regions had shrunk from 10.2% to 0.6% in the period. But, to better understand targeted interventions, and assess the efficiency of the substantial rise in public spending over the past decade, detailed microeconomic and fiscal data or case-study analysis is required. Such details are critical to understand what China has really done in practice.

Overall, I think China has actually set a high bar to define poverty and the poverty line.

In the end, what this really means to the people matters. As I see it, poverty is ultimately a conversation about options. In addition to a minimum living income to met basic needs, the poverty line must also taken into account a range of other factors that address the desire for a better life, including (i) good physical and institutional infrastructure, plus solid education and medical facilities; (ii) ready access to wireless internet connectivity; (iii) supportive local activities, adding on tourism, agriculture, e-commerce and the digital economy; (iv) affordable housing; and (v) massive investment in really rural areas, involving policies that have to be innovative and implementable, complemented by the provision of wide-ranging social services.

Above all, a better life has to include the opening-of-minds, engendering optimism in inspiring youth, with laughter along the way. Former banker, Harvard educated economist and British Chartered Scientist, Prof Lin of Sunway University is the author of “Trying Troubled Times Amid Trauma & Tumult, 2017-2019” (Pearson, 2019). Feedback is most welcome. The views expressed here are the writer’s own.

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