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China’s New Anti Poverty Strategy

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China has achieved remarkable poverty reduction since the reform began in late 1970s. More than 800 million people living under US$1.9 a day has been lifted out of poverty and China’s contribution to reducing the rate of global poverty exceeded 70 percent. However, with the slowdown of economic growth and increase of income inequality, China needs to reform its targeted poverty reduction strategies to enable the poor benefit more from poverty reduction interventions. In November 2013, President Xi Jinping proposed the strategy of “precision poverty alleviation” during his visit to western Hunan, and the strategy has become a significant part of China’s fight against poverty with the objective to end extreme poverty by 2020 in China. This presentation will summarize the main policies and practices implemented under this strategy in recent years. Progress and challenges will also be discussed to give the audience a better understanding of China’s efforts in helping the poor.

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China’s New Anti Poverty Strategy

  1. 1. Accurate Household Targeting: China’s New Anti-Poverty Strategy SANGUI WANG CHINA ANTI-POVERTY RESEARCH INSTITUTE, RENMIN UNIVERSITY OF CHINA
  2. 2. I. Progress in poverty alleviation after the reform China achieved remarkable progress in poverty reduction since early 1980s ◦ According to the World Bank’s poverty line of US$1.9 a day, China cut the number of poor people by 8.6 million in the past 30 years, from 884 million in 1981 to 25 million in 2013 and with an annual poverty reduction ate of 11.8% ◦ China was the first country to complete the MDG goal of poverty reduction. By 2002, it had reduced the percentage of the poor in rural areas to 30 percent, which was 60 percent in 1990. The figure was further lowered to 4.2 percent in 2014 ◦ China’s contribution to reducing the rate of global poverty exceeded 70 percent
  3. 3. I. Progress in Poverty Alleviation after the reform China’s poverty reduction, 1981-2013 Data source: World Bank Development Indicator
  4. 4. I. Progress in Poverty Alleviation after the reform ◦ China’s official estimations show similar trends ◦ measured at the 1978 poverty line, rural poor population in China decreased from 250 million in 1978 to 15 million in 2007 with an annual reduction rate of 9.2 % ◦ Total poor population reduced from 94 million in 2000 to 27 million in 2010 measured at NBS 2008 poverty line and the annual reduction rate was 11.7% ◦ Measured at NBS 2010 poverty line, total poor population decreased from 166 million in 2010 to 43 million in 2006 and the annual reduction rate was 20%
  5. 5. I. Progress in Poverty Alleviation after the reform China’s rural poverty reduction, 1978-2016 Data source: National Bureau of Statistics of China
  6. 6. I. Progress in Poverty Alleviation after the reform Factors contributed to large scale of poverty reduction ◦ Fast economic growth, esp. agricultural growth ◦ Targeted poverty alleviation effort has helped narrow the gap between different regions and accelerate economic and social development of poverty- stricken areas ◦ Establishment of social security system in rural areas since 2007 ◦ Inclusive rural policies have benefited vast sections of the impoverished in rural areas, e.g. “grain for green” campaign, agricultural tax reform, nine-year free compulsory education, etc. ◦ Equal land distribution
  7. 7. I. Progress in Poverty Alleviation after the reform Major poverty alleviation programs Time of implementation Targets Voluntary resettlement Food for work (public work) Subsidized loans Budgetary development funds Poverty alleviation through technological advancement Poverty alleviation through social efforts Compulsory education projects in poor regions Microcredit Integrated Village development plan Promoting labor migration through training Agribusiness “Two Basic Education Plans” in western China Village banking Minimum living standard program Regional development Accurately targeting the poor 1983 1985 1986 1986 1986 1986 1995 1996 2001 2004 2004 2004 2006 2007 2011 2013 Poor counties Poor counties Poor regions Poor counties Poor regions Poor regions Western China Poor regions Poor villages Poor counties Poor regions Poor regions Poor villages Poor households 14 Designated poor regions Poor households
  8. 8. I. Progress in Poverty Alleviation after the reform Year Poorest 20% of pop. in poor counties Poor village Poor county Rural China Income ratio of poor pop. to rural areas Income ratio of poor villages to rural areas Income ratio of poor counties to rural areas 2002 519 1196 1305 2476 21 48 53 2003 494 1305 1384 2581 19 51 54 2004 533 1398 1489 2758 19 51 54 2005 597 1501 1585 2991 20 50 53 2006 665 1643 1746 3248 20 51 54 2007 696 1860 1957 3557 20 52 55 2008 813 2005 2106 3841 21 52 55 2009 875 2300 4170 21 55 Growth rate (02-08) 7.77 8.99 8.3 7.59 Income growth of the poor and poor regions Data source: National Bureau of Statistics of China
  9. 9. II. Challenges in Rural Poverty Reduction Slowdown of economic growth, from 10% to 6.7% Increasing of income inequality, Gini index from 0.288 to 0.469 The poor dose not benefit equally from poverty alleviation programs targeted at poor regions
  10. 10. II. Challenges in Rural Poverty Reduction Year Lowest quintile Second quintile Third quintile Forth quintile Highest quintile All 2002 519 903 1175 1523 2406 1305 2003 494 920 1258 1698 2885 1384 2004 533 987 1358 1840 3150 1489 2005 597 1077 1461 1935 3222 1585 2006 665 1163 1582 2136 3665 1746 2007 696 1293 1775 2393 4150 1957 2008 813 1421 1930 2596 4374 2106 2009 875 1533 2096 2834 4843 2300 2010 940 1714 2343 3182 5411 2557 Growth rate(02-10) 7.7 8.33 9.01 9.65 10.66 8.77 Income growth of different quintile in designated poor counties Data source: National Bureau of Statistics of China
  11. 11. II. Challenges in Rural Poverty Reduction Park and Wang, 2010 Effect of village investment program on household income p.c., consumption p.c.(village nearest neighbor matching estimates)
  12. 12. III. Precision Poverty Alleviation Strategy through Household Targeting In November 2013, President Xi Jinping first put forward the strategy of “precision poverty alleviation” during his visit to western Hunan, and the strategy has become a significant part of China’s fight against poverty. Precision poverty alleviation targets every poor household and individual, instead of promoting regional development of poverty-stricken areas Precision poverty alleviation includes accurate identification, assistance, management, and assessment. The goal is to eradicate extreme poverty under $2.3 dollar a day by 2020
  13. 13. III. Precision Poverty Alleviation Strategy through Household Targeting China has identified 29.48 million poor households with a total population of 89.62 million in 2013. This figure dropped to 43.33 million by the end of 2016. Moreover, the country has registered all the poor households and population and details about the families, available resources, income sources, and reasons of poverty in the national poverty alleviation information system. These identified and recorded poor households are the main targets of all types of poverty alleviation programs.
  14. 14. III. Precision Poverty Alleviation Strategy through Household Targeting The government has taken a series of measures and launched different types of programs to push forward precision poverty alleviation ◦ Promotion of income-generation activities, esp. cooperative agricultural production and value chain development, as well as rural tourism development that target the poor ◦ Asset building for the poor ◦ Relocating 10 million of the poor in remote areas, in harsh natural conditions, to comparatively more hospitable natural villages or small towns with a view to improving the environment and conditions for their development ◦ The governments and state-owned policy banks have mobilized RMB 600 billion yuan for the relocation in the 13th-Five-Year-Plan period
  15. 15. III. Precision Poverty Alleviation Strategy through Household Targeting ◦ Helping a batch of poor households reduce poverty through ecological compensation policies ◦ Subsidies for those who returned their farmlands to forests or pastures to grassland ◦ Inter-regional ecological compensation to subsidize households in areas that provide ecosystem function ◦ 280 thousand poor people were hired as forest rangers with an annual salary of 10,000 yuan last year ◦ Helping poor households reduce poverty through strengthening education ◦ Developing preschool education in poverty-stricken areas ◦ Providing free high school or occupational school education and living allowances for students from identified poor families ◦ This will not only reduce the education expenditure of poor households, but also help end inter-generational transmission of poverty
  16. 16. III. Precision Poverty Alleviation Strategy through Household Targeting ◦ Helping poor households through social security measures ◦ Expanding the coverage and increasing subsidies of the minimum living allowances ◦ Extending and reforming rural cooperative medical care system ◦ Providing severe-disease medical insurance and assistance ◦ Assisting poor households with chronic diseases ◦ Pension insurance for poor households
  17. 17. III. Precision Poverty Alleviation Strategy through Household Targeting Clear division of duties and improvement of governance ◦ Central government is responsible for overall planning, province-level governments for coordination, and county-level governments for implementation ◦ Party secretaries and governors of all poor counties have to remain in their duty till the fulfillment of the task for poverty reduction in their counties ◦ To strengthen community-level poverty alleviation capacity, governments at various levels have dispatched officials to act as first secretary and poverty relief team leaders in 128,000 poverty-stricken villages ◦ Establishing independent third-party poverty reduction assessment mechanism ◦ Academic institutions, non-governmental organizations, and ordinary citizens are also encouraged to participate in poverty relief effort by various means
  18. 18. III. Precision Poverty Alleviation Strategy through Household Targeting Decentralization of fund management ◦ More than 20 funds for poverty reduction and rural development from various sources have been integrated at the county level ◦ County governments are responsible for implementing poverty reduction programs and are entitled to distribute and manage the integrated funds according to the demands of poor households. ◦ The central and provincial governments are mainly responsible for supervision, inspection, assessment and evaluation of the efficiency and effectiveness of poverty alleviation programs to prevent misuse of the funds.
  19. 19. III. Precision Poverty Alleviation Strategy through Household Targeting Great progress has been achieved and poverty reduction has been tremendous since 2010 ◦ Measured at the PRC’s new poverty line of Y2,300 at 2010 constant price, the rural poor population has been reduced from 166 million in 2010 to 43 million in 2016 ◦ The annual poverty reduction rate is 20% and accelerating over time
  20. 20. III. Precision Poverty Alleviation Strategy through Household Targeting Rural poverty reduction rate in recent years, % Data source: National Bureau of Statistics of China
  21. 21. III. Precision Poverty Alleviation Strategy through Household Targeting Challenges ◦ High administrative cost ◦ Coordination difficulty ◦ Over investment ◦ Negative effects on the incentive of the poor ◦ Hard to duplicate in other developing counties
  22. 22. Thank you!

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