China’s Poverty Eradication Drove Some to Riches but Left Others Behind

Feb 24, 2021 | China, CULTURE, GOV, NEWS

Behind the poverty drive is at least $1 trillion in loans over five years, and a burden of cost falling increasingly to local governments

China claimed last year it had met a long-trumpeted target of lifting all its people out of extreme poverty.

President Xi Jinping heralded a “major victory” that the Chinese Communist Party had wanted to achieve before the centenary of its founding in 2021.

But what do the numbers say?

China's Poverty Eradication

China claimed last year it had lifted all its people out of extreme poverty

What Counts as Poverty?

China’s poverty line is around $2.30 a day — slightly above the World Bank’s lowest threshold of $1.90 but below what is recommended for measuring higher income countries.

Local officials have gone door-to-door to determine who is impoverished, measuring by income, housing conditions, lack of medical insurance and whether family members drop out of school.

Some families who own cars or large farm equipment were automatically ruled out of consideration, regardless of their other circumstances.

What has Been Achieved?

China has brought over 800 million people out of extreme poverty, said the World Bank, after launching economic reforms in the 1970s.

Its extreme poverty rate fell from 66.3 percent in 1990 to just 0.3 percent in 2018 — making up for over 60 percent of the decrease in global poverty, according to the Center for Strategic and International Studies.

Nearly everyone now completes compulsory schooling, matching the average level across the world’s high-income countries, and the UN says the child mortality rate also dived in the last two decades.

“For the vast majority of Chinese, life has dramatically improved in the space of a generation,” said World Bank country director Martin Raiser.

Extreme Poverty

Chinese President Xi Jinping declared that his country had eradicated extreme poverty last year, hailing a “major victory”

Are China’s Claims Believable?

Beijing’s official statistics are often approached with scepticism, and experts say poverty figures do not tell the whole story.

There have been hundreds of thousands of corruption cases linked to poverty work, says University of Western Ontario economics professor Terry Sicular.

That includes local officials who falsified data by classifying friends and family as poor to receive funding.

China’s official poverty line is also low when compared to average household income, Sicular added.

The World Bank recommends the higher benchmark of $5.50 a day to gauge poverty in upper-middle income economies.

Raiser estimates that around 13 percent of China’s population still lives on an income below that level.

Liu Qingyou Lifted from Poverty

Liu Qingyou was given a booklet detailing how Xi Jinping’s government has hoisted him and 100 million other Chinese from the breadline

Is it Sustainable?

Funding for poverty alleviation is large in absolute terms but also just “a small percentage of government revenue,” Sicular says.

After macroeconomic growth helped lift living standards over recent decades, Beijing must now look to newer strategies for those on the cusp of the poverty line, she adds.

In many locations, local governments — who have largely borne the burden of improving living standards — are also facing limited fiscal resources.

Many are highly indebted, having invested heavily in infrastructure to tackle poverty, or have benefitted from short-term tax incentives or subsidies.

“Reducing economic vulnerability going forward may require greater focus on investing in skills and helping people move towards higher productivity jobs in the cities,” Raiser added.

Poverty Eradication Policies

Xi Jinping’s poverty eradication policies are linked to the Communist Party’s goal of building a “moderately prosperous society” for its 100th anniversary this year

At his village along a “poverty alleviation road” in Hunan province, farmer Liu Qingyou shares a booklet detailing how Xi Jinping‘s government has hoisted him and 100 million other Chinese from the breadline.

In it, the cause of his family’s hardship is diagnosed as “illness” and “schooling”, followed by a list of ways the state has helped, from grain subsidies to improving the yield of their orange groves.

Authorities designated his family as impoverished in 2014 as Xi ramped up a “targeted poverty relief” strategy that sent officials door-to-door to assess poorer households.

For Liu, the following years brought another boost: a new road cutting through Hunan’s mountainous countryside, helping transport produce to market twice as quickly and giving valuable links to nearby towns.

China's Poverty Line Outdated

Experts warn that rising incomes have made China’s poverty line outdated

But it has not been a smooth journey up China’s economic ladder.

Liu says his harvests have not improved despite efforts by local authorities to help him diversify his crop.

Meanwhile, his wooden house does little to keep out temperatures that plunge close to zero in the winter.

From his vantage point, Liu and his family of five still live modestly, and he worries for their future — despite being counted as lifted from poverty.

“We can get by,” he said. “But our house is bad.”

He wants what some others have received from the state: resettlement or enough funds to build a brick home.

The reasons he did not qualify are unclear to him.

“Why can’t we have the same?” he asked.

Harvest Have not Improved

Liu says his harvests have not improved despite efforts by local authorities to help him diversify his crop

War on Poverty

China’s decades-long war on want has yielded remarkable results.

“Over the past 40 years, China’s economic growth has resulted in more than 800 million Chinese escaping extreme poverty… This is an extraordinary achievement,” said Martin Raiser, the World Bank’s country director for China.

In 2015, Xi vowed to eradicate extreme poverty by 2020, a pillar of the Communist Party’s goal to build a “moderately prosperous society” by the 100th anniversary of its founding later this year.

Xi declared that the target was reached last year, heralding a “major victory”.

But reality on the ground is patchier, with experts warning that rising incomes have made China’s poverty line outdated.

Poverty Relief Aid

Complex criteria to determine who gets poverty relief aid has fuelled unhappiness

Complex criteria to determine who gets aid has also fuelled unhappiness.

Liu’s family was officially lifted from poverty around four years after being designated — the product of a policy shift by Beijing away from relying on the breakneck growth that pulled nearly a billion people out of penury.

Authorities set a poverty line based on income of around $2.30 a day and offered targeted help to those under the line.

But China is now an upper-middle income country, for which the World Bank suggests a benchmark that doubles the current threshold.

Communist Party Bases of Legitimacy

The Communist Party has based its legitimacy on delivering continued growth

“The current low, unidimensional, rural poverty line no longer reflects what it means to be poor in China’s rapidly evolving society,” said Terry Sicular of the University of Western Ontario.

Contacting villagers remains sensitive, with six cars of officials showing up unexpectedly during AFP’s Hunan visit.

Authorities asked about AFP’s interview plans and insisted on accompanying reporters around after acquiring details like travel history for Covid-19 prevention.

A police officer showed up at another interview, staying to observe for “sensitive” issues.

Business Has Been Weak

Although Liu received a grant as a poverty-stricken household he says business has been weak

Patchy Results

The Communist Party has based its legitimacy on delivering continued growth.

Ahead of the 2020 deadline, party cadres sprung into action: identifying poor households, distributing funds, and building infrastructure like the Qianqing road by Liu’s house.

But behind the poverty drive is at least $1 trillion in loans over five years, and a burden of cost falling increasingly to local governments.

In Hunan, lack of local funds initially crippled progress of the winding, 63-kilometre (40-mile) road — finally completed after state broadcaster reports piled pressure on authorities.

“Transport became more convenient… this has increased the income of regular folk by at least 30 percent,” Liu said.

Orange Business

Xiang Xiuli’s family said their orange business had doubled in size since the Qianqing road was built

But although Liu received a grant as a poverty-stricken household, he says business has been weak.

A low table sits in his sparsely-decorated house, by a stove where his son readies a lunch of cured bacon — a Hunan specialty.

A local government decision to diversify into tea plantations and plant new orange varieties hit earnings, he added.

“Before the trees were removed, our family could earn 20,000 to 30,000 yuan ($3,100-4,700) a year,” said Liu. This dropped to a fraction of the amount.

Lifted From Poverty

Mi Jiazhi was officially lifted from poverty in 2017 and says things have never been better

The Upside

There are plenty of signs of growing wealth, however.

Per capita income of poverty-stricken households in Hunan grew from around 2,300 yuan to 12,200 yuan over five years, official figures say.

The Qianqing road is a sign of the area’s increased wealth.

Farmer Xiang Xiuli, 53, said villagers no longer had to carry produce across difficult terrain to the nearest roads for sales.

Her family said their orange business had doubled in size and their children were now able to attend better schools.

For farmer Mi Jiazhi, officially lifted from poverty in 2017, things have never been better.

“We have all sorts of resources,” said the 71-year-old.

“Things are good now… I can have 30,000 to 40,000 yuan in income (annually),” he said.

With better income and help from his children, he will soon move into a newer, larger house.

“I’m very happy,” he added.

Back into Hardship

Setbacks like illness and unemployment can dunk households straight back into hardship


But more work is needed to ensure the mass move up the economic chain is sustained.

As the poverty line rises, many city-dwellers will fall below it too, cautioned Raiser.

Beijing has already flagged the risk of backsliding, while villagers said Covid-19 also weighed on earnings.

Poverty alleviation official Ou Qingping warned in December that some people still reliant on aid had “insufficient” means to grow wealthier.

“Once alleviation policies are suspended, they are likely to return to poverty,” he said.

Setbacks like illness and unemployment — or pandemics — can also dunk households straight back into hardship.

“The elimination of poverty at a point in time does not eliminate poverty,” Sicular said.