China

Recent trends suggest domestic demand is cooling down, but external demand keeps GDP growth high, while slower money growth indicates that external surpluses pose as... Show More + of yet little risk for China's monetary policy. Nevertheless, the macroeconomic outlook for 2005 remains favorable. The note further suggests, given the constellation of risks, prudent economic policies are appropriate. The National People's Congress, March session, confirmed a broadening of Government policy objectives. Recent economic developments and outlook, indicates the changing composition of demand abates overheating concerns. Furthermore, the macroeconomic outlook for 2005 remains favorable: although world growth is likely to come down from the record 3.8 percent in 2004, with 3.1 percent China is still above trend. Show Less -

Governments' first instincts are often to attempt to tackle weaknesses in public financial accountability by investing in computerization of financial management information... Show More + systems. However, in most East Asian contexts the World Bank advises countries that reforms need to start not from the technical hardware of IT but from an effectively implemented reform of the foundations of public financial accountability, starting with budget management processes and the control regime. Immediate priority steps include: reforming the budget process to improve policy prioritization and fiscal discipline, including integration of off-budget accounts into the main budget; better coordination of planning and budgeting; better coordination of current and capital expenditure; more rigorous medium-term fiscal and expenditure planning; greater ownership of budgets by line departments and frontline service providers; the integration of performance information into the budget formulation process; and streamlining both internal and external management control systems. Countries such as Thailand, Vietnam, Indonesia and the Philippines are working with the World Bank to modernize public financial accountability institutions. Show Less -

Both as an accompaniment of overall economic growth and also through a strong commitment to improving standards of education, health and nutrition for all, China has... Show More + compiled an impressive record in reducing absolute poverty over the last four decades. Perhaps the most telling indicator of the improvement in the overall well-being of the Chinese population is the increase in expectation of life at birth, which nearly doubled from 34 years in the early 1950s to 67 years at present. Other indicators of social development also document tremendous improvement. The crude death rate and infant mortality rate both declined by about three-quarters since the early 1950s, and illiteracy is estimated to have dropped from 80% of the adult population in the early 1950s to about 30% at present. Average per capita availability of food energy increased by nearly 40%, from about 90% of food energy requirements in the early 1950s to 115% by the late 1980s. These indicators of social development in China compare favorably with the estimates for India, Indonesia, Brazil, and the averages for other low and middle income countries. Show Less -

This paper has focused on more targeted micro interventions to fight poverty. But the battle against poverty is not a skirmish off to one flank; instead, it must be... Show More + at the heart of the campaign for development. Successful long-term poverty reduction depends not only on well-constructed and focused poverty and poor-area programs, but on growth and development of the society as a whole. This development in turn hinges on how well the country makes progress on two fronts: improving the investment climate, and enabling poor people to participate in growth. China has made great progress on all three over the past twenty years, but there is still much room for further improvements in the investment climate, in such areas as governance and rural infrastructure. It is important to stress that the issue here is not primarily the level of investment as China s investment levels are already among the world s highest. The most important effect of a good investment climate is to raise the productivity of investment and increase the dynamism of private enterprise. Show Less -

Although China has long been recognized for its achievements in reducing absolute poverty since 1978, international standards now estimate increased poverty incidences,... Show More + particularly among the rural poor, mostly concentrated in the western provinces, within remote and mountainous townships, where the absence of educational, health, and nutritional aspects prevail. The study reviews the macroeconomic context, analyzing trends in employment, inflation, as well as fiscal challenges in poverty reduction, presenting an overview on the poverty reduction programs, rather focusing on the implementation of new programs to meet the needs of the poor. It offers measures to increase mountain areas productivity, through strategic economic development, improved agriculture programs, and market analysis. Options for poverty reduction through labor mobility, or voluntary resettlement are weighed, emphasizing education, health, and nutrition. While recommendations include efficient use, and strengthened financial monitoring of funds for poverty reduction, through increased upland agricultural production, provision of social sectors, and, rural enterprise development, forging links with government, academic, and civil organizations, the report fails to address the significant emergence of urban absolute poverty, which may well prod future macroeconomic downturn. Show Less -

The authors study transient poverty in a six-year panel dataset for a sample of 5,000 households in post-reform rural China. Half of the mean squared poverty gap is... Show More + transient, in that it is directly attributable to fluctuations in consumption over time. There is enough transient poverty to treble the cost of eliminating chronic poverty when targeting solely according to current consumption - and to title the balance in favor of untargeted transfers. Transient poverty is low among the chronically poorest, and tends to be high among those near the poverty line. Using censored quantile regression techniques, the authors find that systemic factors determine transient poverty, although they are generally congruent with the determinants of chronic poverty. There is little to suggest that the two types of poverty are created by fundamentally different processes. It appears that the same things that would help reduce chronic poverty - higher and more secure farm yield and higher levels of physical and human capital - would also help reduce transient poverty. Show Less -

China has seen a huge reduction in the incidence of extreme poverty since the economic reforms that started in the late 1970s. Yet, the growth process has been highly... Show More + uneven across sectors and regions. The paper tests whether the pattern of China´s growth mattered to poverty reduction using a new provincial panel data set constructed for this purpose. The econometric tests support the view that the primary sector (mainly agriculture) has been the main driving force in poverty reduction over the period since 1980. It was the sectoral unevenness in the growth process, rather than its geographic unevenness, that handicapped poverty reduction. Yes, China has had great success in reducing poverty through economic growth, but this happened despite the unevenness in its sectoral pattern of growth. The idea of a trade-off between these sectors in terms of overall progress against poverty in China turns out to be a moot point, given how little evidence there is of any poverty impact of non-primary sector growth, controlling for primary-sector growth. While the non-primary sectors were key drivers of aggregate growth, it was the primary sector that did the heavy lifting against poverty. Show Less -

China's progress in poverty reduction over the last 25 years is enviable. One cannot fail to be impressed by what this vast nation of 1.3 billion people has achieved... Show More + in so little time. In terms of a wide range of indicators, the progress has been remarkable. Poverty in terms of income and consumption has been dramatically reduced. Progress has also been substantial in terms of human development indicators. Most of the millennium development goals have either already been achieved or the country is well on the way to achieving them. As a result of this progress, the country is now at a very different stage of development than it was at the dawn of the economic reforms at the beginning of the 1980s. China's poverty reduction performance has been even more striking. Between 1981 and 2004, the fraction of the population consuming below this poverty line fell from 65 percent to 10 percent, and the absolute number of poor fell from 652 million to 135 million, a decline of over half a billion people. The most rapid declines in poverty, in both the poverty rate and the number of poor, occurred during the 6th, 8th, and 10th plans. During the 7th plan period the number of poor actually rose, while in the 9th plan period, the poverty rate declined only marginally. But the pace of poverty reduction resumed between 2001 and 2004 and there are indications that during the first couple of years of the 11th plan poverty has continued to decline rapidly. The most recent official estimate of rural poverty in China for 2007 puts the number of poor at 14.79 million, or less than 2 percent of the rural population. While there is no official urban poverty line, estimates by others have found poverty levels in urban areas to be negligible using an urban poverty line that is comparable to the official poverty line for rural areas. These estimates thus suggest that only about 1 percent of China's population is currently in extreme poverty. Notwithstanding this tremendous success, the central thesis of this report is that the task of poverty reduction in many ways continues and in some respects has become more demanding. Show Less -

The China Southwest Poverty Reduction Project (SWPRP), implemented in 1995-2001 in the Guangxi Autonomous Region and the provinces of Guizhou and Yunnan, covers 35 of... Show More + China's poorest counties, with about 2.8 million primary beneficiaries. The project areas are dominated by the karst topography, common in Southwest China, that features limestone mountains marked by sharp peaks and ridges, with sinks and underground caverns. Cultivable land is found only in the sinks and valleys. SWPRP was the first World Bank Group-supported project in China to use an integrated multisectoral rural development approach to attacking absolute poverty in a severely resource deficient area, where single-sector programs cannot achieve sustainable poverty reduction. Closely linked to China's national poverty reduction program, SWPRP's principal objectives were to: (a) demonstrate the potential of a multisectoral approach to poverty reduction at the village level; (b) develop a program to find employment for the rural poor in the rapidly growing urban areas of China; (c) upgrade poverty monitoring at the national and local levels; and (d) significantly reduce poverty in these very poorest counties in southwestern China. The project cost at completion was $464 million (5 percent below the appraisal estimate). The Bank provided a loan of $47.5 million and an International Development Association credit of $200 million equivalent. Show Less -

The author tests for external effects of local economic activity on consumption and income growth at the farm-household level using panel data from four provinces of... Show More + post-reform rural China. The tests allow for non-stationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from under-investment in certain externality-generating activities, of which agricultural development emerges as the most important. Show Less -