From poor areas to poor people: China's evolving poverty reduction agenda

April 8, 2009

  • China's record of poverty reduction and growth is enviable
    • China's record over the last quarter century in reducing extreme poverty has been remarkable
      Between 1981 and 2004, the fraction of the population consuming less than a dollar-a-day fell from 65% to 10%, and more than half a billion people were lifted out of poverty
    • Between 2001 and 2004 the pace of poverty reduction accelerated, and there are indications that poverty has continued to decline rapidly up to 2007
    • Growth has been central to China's poverty reduction performance
  • But the task of poverty reduction continues and in some respects has become harder
    • Measured by international standards, the number of poor in China remains high
    • Vulnerability to poverty is widespread, especially in rural China, and number of those vulnerable to the risk of falling into poverty is about twice as high as the number of poor in a given year
    • As poverty rates have fallen, the remaining poor are harder to reach as they are more dispersed
    • While economic growth has been critical for poverty reduction, the responsiveness of poverty to economic growth has decreased
    • Income inequality has risen significantly because of a widening rural-urban gap and increasing inequality within both rural and urban areas
    • Because incomes matter more now than they used to for access and outcomes in health and education, and the burden of health and education expenditures for the poor has increased
    • With large-scale restructuring of state-owned enterprises, unemployment has risen and labor force participation has declined in urban areas
    • Growing informalization of the urban labor market raises concerns about the welfare of workers
    • The emergence of a "floating population" poses continuing challenges for social policy
    • New systems of social protection are still evolving and many challenges remain
  • Policy initiatives in response to these challenges suggest a broader poverty reduction agenda is evolving
    • The launch, in 2000, of the Western Region development strategy
    • Restructuring of poverty alleviation investments
    • Development of the urban social security system
    • Training program to support transfer of rural surplus labor
    • Elimination of agricultural taxes
    • Supporting farm incomes
    • A nationwide rural social assistance system
    • A rural health insurance scheme
    • Urban residents' basic medical insurance
    • A medical assistance scheme in rural and urban areas
    • Compulsory education finance reform
  • What the review suggests about the main priorities for poverty reduction and what is needed to implement them
    • Adopting a broader conception of poverty and an adequate threshold for identifying and targeting the poor
    • Retaining rural poverty reduction as the top priority
    • Promoting opportunity by raising the returns to labor 
    • Enhancing security by expanding and improving the coverage of the social protection system in rural and urban areas
    • Fostering equity and reducing poverty by ensuring secondary school education and basic healthcare for all
    • Supplementing area-based poverty reduction efforts with a household-oriented approach
    • Providing an adequate and equitable allocation of resources for local governments
    • Strengthening institutional arrangements to promote participation, enhance accountability and improve coordination
    • Enhancing statistical monitoring and evaluation capacity