In 1949, China was one of the world’s poorest countries with only 10 countries having a lower GDP. Now, however, it received the classification of being a high-income status country, with 800 million people having risen out of poverty since the 1980s. In 2021, the Chinese government announced that it had eradicated absolute poverty in the country. As a result of this strong and sustained development, the globe has recognized poverty reduction in China as a success.

A Brief History of China’s Success

The number of people living in China with incomes less than $1.90 per day, which is the international poverty line as defined by the World Bank to help track global extreme poverty, has fallen down significantly. An important achievement, this represents a 75% global reduction of those living in extreme poverty. This significant reduction has enabled China to become a “moderately prosperous society in all respects,” with poverty reduction in the country a result of continued economic growth and reforms starting from the 1980s. Key developments across the decades include:

• 1980-1990: From 1980 to 1990, rapid income gains occurred in agriculture including an increase in production, industries’ subsuming of far labor and the increase in quality and quantity of food consumption.
• 1990-2000: In 1990-2000, industry became the prime focus of Communist Party Chairman, Deng Xiaoping, who deepened and widened the reforms in both the rural and urban areas. This involved furthering market-oriented reform for future development and Chinese prosperity.
• 2000-2010: The years 2000 to 2010 saw dynamism within the country’s export-oriented coastal areas spread farther inland. Herein, rural-to-urban migration increased, investment in infrastructure grew and growing proportions of China’s land became economically integrated into global value chains. There was also an expansion of Chinese social policies, including the creation of a basic safety net for the rural population.
• 2010-2020: From 2010 to 2020, China widened the social policies it implemented during the 2000s, something which led to a targeted poverty eradication campaign. However, transfers became a more important factor in poverty reduction than labor incomes.

Poverty Reduction Under Xi Jinping

Since becoming the leader of China in 2012, Xi Jinping implemented his own policies to attain further poverty reduction in China. The core action includes deploying funds to cover several areas such as financing for rural infrastructure, agricultural subsidies and discounted loans. Other strategies include:

• Targeting households that are in need of support rather than whole villages and counties. These households include people who are ill, handicapped or destitute.
• Moving away from conditional cash transfer programs and towards loans, wages and subsidies.
• Targeting individuals and households for resettlement so that they have better opportunities at living a fulfilled life.

Human Capital Failure

Despite poverty reduction in China receiving worldwide recognition, there are still a significant number of people who remain vulnerable and live in poverty. Human capital, especially in rural areas, remains underdeveloped. This is due to deficient education, with 63% of students dropping out of school before they graduate high school. There is also the issue of malnutrition, health problems and lack of childhood development for children.

Not only does the lack of efficient human capital negatively impact the future of rural children and their families, but it also threatens the stable future of China, even derailing the country’s success in poverty reduction. Currently, around 70% of the Chinese labor force lacks a high school education. As the country moves towards an innovation-driven economy, something which began during the reform period, between 200 and 300 million working-age Chinese may become unemployable. As a result, this is something that China needs to address.

The Future

In August 2021, President Xi introduced the concept of common prosperity at the Central Committee for Financial and Economic Affairs with the aim of achieving it by 2050. He has referred to this term as being present when the incomes of low-income groups increase and there is societal fairness, balanced regional development and an emphasis on people-centered growth.

Common prosperity signals a new era for the country (ending the reform period), where socialist modernization receives recognition as pivotal for China’s continued poverty reduction. Along with focusing on the areas mentioned above, it seeks to address the perceived social ills which have stemmed and grown from capitalism and unchecked growth.

Common prosperity represents an optimistic future for poverty reduction in China. It shows the care and attention placed on social development, along with the continual attention directed to economic growth. President Xi hopes to make “solid progress” on this goal in 2035, and then to “achieve common prosperity by 2050.”

– Harkiran Bharij
Photo: Flickr