China
Scores Big Against Poverty But the Poor Haven’t Gone Away
Xi Jinping will soon celebrate the end of extreme rural
destitution. Hundreds of millions of Chinese continue to struggle.
By
November 29, 2020, 8:00 AM GMT+8
China has all but met President Xi Jinping’s pledge to
eradicate extreme poverty by 2020. More than 800 counties considered severely
impoverished just under a decade ago have now cleared a government-defined line
of 4,000 yuan, or roughly $600, in annual per-capita income. The last nine, in
the province of Guizhou in China’s southwest, were removed from the
list this past week.
The sheer scale of China’s overall achievements when it comes
to poverty alleviation is remarkable. More than 850 million people have
been lifted out of extreme penury in under four decades. Almost 90% of
the population was below the international poverty threshold in
1981, according to
the World Bank; by the 2019, that was under 1%. It’s true the world as a whole
has seen a dramatic improvement in poverty rates, but more than three-quarters
of that is due to China. And the amelioration to individuals’ lives under
the latest campaign — which involved tracking down remote villages
and the very poorest families, one by one — are real and visible.
The milestone, a year before the Communist Party’s 100-year anniversary, is a huge propaganda win. It delivers a timely boost for Xi, who made this a very personal campaign, and likely will eventually officially mark the achievement with fanfare. It’s a morally laudable, and very public, demonstration of what government machinery can achieve with its unique ability to mobilize resources.
It isn’t, though, the categorical success that Beijing officials, and Xi himself, will portray when it is officially celebrated. It’s as much about semantics as it is about reality on the ground. Extreme poverty is officially gone and millions of villagers have been moved off mountaintops, but many more continue to live with significant privation. The uneducated and elderly will struggle to move up further, and there’s plenty of penury in urban areas and among migrants, often excluded from official discourse that has focused on rural poverty. Inequality is rising too.
As
Matthew Chitwood, a researcher who has just returned from two years in rural
Yunnan, told me, most of those once living in hardscrabble hill
settlements see themselves as better off now, with new homes and tarmac roads.
But that doesn’t mean they have stopped being poor, or that their status
— and those of millions of others — will continue to improve.
The government is quite aware of this. Premier Li Keqiang stirred up a
storm earlier this year when he pointed out that 600 million
people — more than two-fifths of the total — still
had an income per person of barely 1,000 yuan, or about $150, a
month. Hardly enough, he said, to rent a room in a medium-sized city.
That’s possibly a pessimistic reading
of the statistics. But Li highlighted a very real problem. China still
has a vast, low-earning population, a problem far trickier to
fix. For one, many are insufficiently educated: Scott
Rozelle of Stanford University has pointed out that
in fact China has one of the least educated labor forces in the
middle-income world, with only three in 10 having ever attended high school,
according to the 2015 national census.
Many of
those in the bottom cohort are also rural workers who have migrated
to towns but, thanks to the hukou system of household registration, have
little access to local benefits — another prickly problem.
One of China’s great advantages is that the bottom half of its population has benefited from its economic growth over the last decades. A study by economist Thomas Piketty and others last year found that average incomes for that cohort multiplied by more than five times in real terms between 1978 and 2015, compared to a 1% drop for same group in the United States. But that may not continue.
Worse,
there’s the fact that lifting people out of poverty with lump sums and
zero-interest loans doesn’t necessarily stick. It isn’t impossible to
slide backward and find that gains reverse, as many discovered during the
Covid-19 outbreak. China has done better in the pandemic than many others, but
laborers still suffer when external demand collapses. Welfare provision is
sparse.
Encouragingly, Beijing is not deaf to the question of what happens
next, as Li’s comments suggested. To go further, it could do worse than to
reconsider how poverty is measured and targeted. That doesn’t mean
a fruitless debate over whether China’s absolute poverty line is
marginally higher or lower than the international standard once all factors are
considered. The fact is that having cleared a modest county-level hurdle
and dealt with the destitute, to adequately deal with the wider problem of a
huge low-income class in a still-expanding economy, it would be better served with a
more dynamic definition that also considers poverty as relative, and even
subjective. Not least because how China’s citizens feel will determine how they
see their leaders.
Hong Kong, not usually an example in dealing with questions of
income distribution, uses relative
poverty, setting the line at 50% of the median household income,
before government intervention, adjusted for household size. The
European Union uses an
at-risk-of-poverty threshold of 60 % of the national median disposable income,
after social transfers. China’s “two no worries and three guarantees” that
cover food, clothing, housing, healthcare and education show that it too
can think more broadly. No province is rich if children are underfed and
ill-educated. It could do worse than to now take a wider view of measurement
and targets, perhaps even considering social mobility. That should result
in more holistic approaches to combatting the problem too.
The party
that completes its century next year has thrived as incomes have
risen. It needs to keep everyone moving on up.
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