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China’s Poverty Reduction Plan

China's poverty reductionSince 1980, the number of people living in absolute poverty in China has been reduced by 800 million. This has coincided with China’s sustained GDP growth for the past two decades and 8% growth in 2021. However, for China’s poverty reduction to continue, the country needs to address issues of income inequality and lack of human capital development.

How Poverty is Measured

In 2020 President Xi Xing Ping announced the “complete victory” of his campaign to eliminate poverty. He claimed this because everyone had met the Chinese government’s extreme poverty line of $2.25 income per day. But, according to the World Bank, an “upper-middle income” country such as China should use a poverty line of $5.50 a day. At this level, China’s poverty reduction still appears to have performed well, reducing the percentage of people below the poverty line of $5.50 from 98% in 1990 to 17% in 2018.

However, China now has a similar income per capita that the United States had in the 1960s when the US set its poverty line at $21.70 (adjusting for inflation). At this poverty line, the US had less than one-quarter of its population in poverty. In comparison, applying a poverty line of $21.20 to China today over 80% of the population would be in poverty. This suggests that China is far from achieving “complete victory” in eliminating poverty.

Problems with Mass Mobilization

During the last decade, China relocated hundreds of millions of rural people to new city apartment complexes. Unfortunately, many cannot afford the city rents. In fact, the current Chinese Premier Li Keqiang recently noted that 600 million people cannot afford city rents. As the New York Times reported in 2013, “Top-down efforts to quickly transform entire societies have often come to grief, and urbanization has already proven one of the most wrenching changes in China’s 35 years of economic transition.”

Lack of Investment in Human Capital Development

Also, according to a 2021 article in The Diplomat, China has not invested in rural education and human capital development. That means 70% of the workforce, which engages in labor-intensive, low-skill jobs, hasn’t completed high school and therefore does not qualify for the retraining programs for better-paying jobs. In 2019, the manufacturing and construction sectors employed 46% of the migrant workforce. In addition to low wages, migrant workers encounter more safety hazards.  They also lack access to social welfare protections available to others.

RCEF: Pushing Quality Rural Education

To continue to reduce poverty, China will need to address these issues. This will become increasingly important as China loses its comparative advantage in the labor-intensive markets, and increasingly relies on innovation to drive growth. Luckily, non-government organizations such as the Rural China Education Foundation (RCEF) are taking the lead to promote quality education in rural areas of China. The RCEF is focusing on helping the left-behind young and elderly.  It innovates with its community-based and student-centered curriculum rather than focusing strictly on test prep.

Access to Education for All through AI Investment: Squirrel AI

On top of this, China’s mass implementation and investment in artificial intelligence (AI) is helping to provide access to education for all. Derek Li’s Squirrel AI is a good example of this. Li found that conventional online training failed because it didn’t engage students for more than a 14-minute stretch. Squirrel AI uses adaptative AI technology to teach, evaluate, test and train students. The AI technology simulates the methods and responses of the highest-rated teachers.

As Li says, “AI technology is at a point where it can disrupt the education industry that has not changed for hundreds of years, by providing every single child with access to the best teacher for that individual child’s needs.”  Squirrel AI also teaches students methods and thought processes anchored in imagination and creativity. It is one of the top two adoptive AI companies globally. The company has also opened 1800 offline learning centers that provide educational access to students in rural areas. This was especially important in times of COVID-19.

Thinking Ahead

If China’s poverty reduction is to continue at a more sustainable rate, further development of quality education and other means of human capital development will be important. Hopefully, this development will also help increase the wages of the lowest wage workers who still live at a level of income that is not viable.

– Reuben Cochrane
Photo: Flickr

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Five Ways China Beats Poverty

Five Ways China Beats Poverty
China has made remarkable progress in solving its poverty problems. Between 1986 and 2016, China’s GDP increased from $300.758 million to $11.199 trillion. In 2017, the world’s GDP growth was 2.49 percent, but China’s GDP grew by 6.7 percent. This significant growth is closely related to China’s effective poverty policies. In 2016 alone, the Chinese government lifted 12.4 million people out of poverty.

Five Ways China Beats Poverty

  1. Target individuals in need
    Targeting individuals is one of the ways China beats poverty. In 2012, the first year of President Xi Jinping’s first term, he declared the Chinese poverty issue to be the top task of his presidency. He called it “the baseline task for building a moderately prosperous society,” which will be achieved by 2020.The main approach to achieve this goal is the Minimum Living Allowance Guarantee, or Dibao. Dibao is a program that guarantees every household meets the minimum income level set by local governments. For example, the minimum income level set by the Beijing government was around $162, and the rural minimum income level was $123.Even though this program is controversial because of governmental corruption, it does improve the quality of life in extremely poor households. Between 2013 and 2016, more than 10 million rural people were lifted out of poverty every year, which aids in reaching President Xi’s goal: eliminate poverty by 2020.
  2. Enact comprehensive social development programs
    The second way China beats poverty is by enacting social programs. The Chinese government has implemented many social development programs since 2000, such as nine-year compulsory education. The nine-year Compulsory Education Law was exacted in 1986 with the goal of minimizing illiteracy.Another outstanding social program is the New Rural Social Pension Insurance (NRSP), which was announced in 2009. It was implemented in all counties in 2012, and more than 80 million peasants were covered by this program. This policy stipulates that individuals over 60 years of age can receive pension benefits. The amount is around 10 percent of the average annual income of rural areas in China.This policy targets a wide range of citizens and improves retirement rates, especially for women. The amount given by NRSP is limited, but it has a substantial effect on rural people’s quality of life.
  3. Merge small family fields into cooperatives
    One of President Xi’s strategies to solve poverty in rural areas is merging small family lands into cooperatives. This system pools land by peasants voluntarily giving up their ownership of free land development and becoming shareholders. The peasants then plant commercial crops such as tea to gain more profits. Some local companies invest in these lands and bring more financial benefits to rural areas. This policy solves the problem of deficiency of scattered development and generates a cohesive effect.
  4. Relocate peasants
    Another way China beats poverty is by relocating rural people. People who live in geologically hazardous areas that are prone to landslides and earthquakes, or in remote areas, will be relocated. Approximately 9.81 million people are set to move between 2016 and 2020. This program helps people who are trapped in remote and poor mountain areas and provides them with an opportunity to learn about new ideas and advanced technology.
  5. Develop tourism in villages
    The Chinese government develops tourism in villages by offering experiences based on the community. Visitors can live in local houses and participate in rural activities such as farming and cooking in primary kitchens. One successful example of this program is Lijiang, an old town in Yunnan province. About 15 million visitors come to this town, which generates more than $3 billion in profits every year.

These are five ways China beats poverty, and through these methods the country has seen remarkable progress. Other countries with similar situations can adopt some of these strategies to help solve their own poverty issues.

– Judy Lu

Photo: Flickr

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China’s Poverty Reduction Plan Making Strides

China's Poverty Reduction PlanThe 11th ASEAN-China Forum on Social Development and Poverty Reduction took place in Cambodia’s Siem Reap province. During the meeting, over 120 government officials, experts and scholars from China and ASEAN countries gathered together. They discussed China’s poverty alleviation plan and most successful practices.

The Country Director of the United Nations Development Program (UNDP) Cambodia, Nick Beresford, praised China for their poverty-reduction methods, which have lifted “hundreds of millions of people out of poverty.” According to the China’s State Council Leading Group Office of Poverty Alleviation and Development, more than 700 million Chinese citizens have transitioned out of poverty. In addition, the rural poor population in China has declined to 43.35 million in December 2016.

The President of the International Fund for Agricultural Development (IFAD), Gilbert Houngbo, also believes that China’s poverty reduction plan presents an excellent model for other countries to implement within own their economies. China’s economy is the second largest and accounts for 14.8 percent of the world economy, right behind the U.S. economy. With 1.38 billion people, China also has the largest population in the world.

“Even as a symbol,” President Houngbo stated, “China’s economic transition offers hope to other developing countries that want to do the same thing.”  The primary component of China’s poverty reduction plan is steady income growth for the bottom 60 percent of households in rural China. This plan has four underlying factors:

  1. Increased industrialization and urbanization throughout the country has transformed an agricultural surplus labor force into urban employment in China.
  2. Equally distributing land between the bottom “quintile households” and the top income households is another goal. The equal distribution of land enables the lower income households to proportionally benefit from the payments the state provides to support agricultural development.
  3. Universal social development programs are making contributions to increase income growth for bottom households. China has successfully implemented several social development programs designed to improve educational, medical and income growth.
  4. Targeted poverty reduction programs will develop the physical infrastructure and increase social development. They will also generate income to assist poor households.

A global market research and consulting firm called Ipsos conducted an international survey titled, “What Worries the World.” The 2017 survey documented answers from 26 different countries. They asked a random sample of 18,557 adults, aged 16 to 64, if they believed China had been making the right decisions for its citizens.

China has the highest percentage (87 percent) of people believing their country is going in a positive direction. In the survey, China was the only country to list “moral decline” as their top issue. A majority of the other 25 remaining nations listed “health care” or “unemployment” as their country’s top issue.

In a distant southern Chinese village, China’s poverty reduction plan is being tested. The Yi ethnic group has a unique language and culture from mainstream China. They reside in a geographically remote location. Many of them are illiterate and have a value system distinct from traditional money and prospects. Years of government intervention have failed to alter the Yi ethnic groups way of life.

In the village of Liangshan, more than 400,000 people are “classified as poor, meaning their yearly income is less than 340 dollars.” The Communist Party of China believes that lifting the Yi ethnic group and others out of economic hardship is critical to achieving the country’s goal of ending poverty by 2020.

While insufficient schools and language barriers present large issues, many locals believe that job creation for minority groups would be more successful than simply giving them money.

– Madison O’Connell

Photo: Flickr