Commentary: A hundred years of revolution, China still can’t take its eyes off poverty

Commentary: A hundred years of revolution, China still can’t take its eyes off poverty

The 100-year anniversary of the founding of the Chinese Communist Party (CCP) in July makes it timely to assess whether it has accomplished its goal of ending endemic rural poverty, says the SMU’s John Donaldson.

A village sits outside a farmhouse compound in a village in rural Shaanxi province
A village sits outside a farmhouse compound in a village in rural Shaanxi province, China, June 11, 2017. The graffiti reads : "Fighting hard against poverty". REUTERS/Sue-Lin Wong

SINGAPORE: Earlier this year, China’s President Xi Jinping declared “complete victory” over the problem of absolute rural poverty, asserting that accomplishing the pledge he made in 2015 was a “miracle”.

It would be no less than a miracle for China to eliminate poverty as it has a massive population that shares too little arable land, making rural poverty nearly inevitable.

As the 100-year anniversary of the founding of the Chinese Communist Party (CCP) draws near in July, has Xi’s anti-poverty policy accomplished one of the Party’s central goals of eliminating poverty among China’s poor?

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Unlikely. Despite impressive progress, millions of Chinese continue to struggle to meet their basic needs.

Xi’s declaration claimed the complete elimination of “extreme poverty” and not poverty, while the government asserts complete victory over “absolute rural poverty".

ABSOLUTE POVERTY

The careful use of these terminologies reveals deeper undercurrents. 

One, the emphasis on “rural poverty” hides that urban poverty persists in China.

Rural to urban migration exacerbates urban poverty. For one, among the millions of rural residents who migrate to the city in search of work, many don’t succeed and, without access to China’s urban welfare system, join the ranks of China’s urban poor.

Second, rural to urban migration has also adversely affected many low-income urbanites. 

According to an Asian Development Bank report, rural-to-urban migration contributes to as much as 40 per cent of urban inequality in China whereas relative poverty among urbanites in China tripled between 1988 and 2013, according to social scientists Björn Gustafssonand Ding Sai.

China claimed last year it had lifted all its people out of extreme poverty
China claimed last year it had lifted all its people out of extreme poverty AFP/NOEL CELIS

In this way, some of the decrease in rural poverty appears to have traded off with higher urban poverty and inequality.

Two, eliminating “absolute rural poverty” does not mean that rural poverty is over. The term refers to a level where people are unable to meet their most basic needs and underscores that China’s recent efforts have been focused on poverty’s severest forms.

But even the claim of eliminating absolute rural poverty is likely exaggerated. One major reason for this has to do with the way that China measures poverty, setting its national poverty line at too low a level.

China’s standard for measuring poverty at US$2.30 may seem more ambitious than the international poverty line of income equivalent to US$1.90 per person per day.

IN GOOD COMPANY

However, that poverty line of US$ 1.90 per person per day was designed for the world’s poorest countries, such as Afghanistan, Mali, and Haiti.

China is among the largest economies in the world, keeping company with countries such as the United States, Germany, and France. Each of these countries adopt poverty lines - at upwards of US$21 per person per day - that are substantially higher and thus even more inclusive than China’s.

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However, its massive economy notwithstanding, it is assuredly unfair to compare China, a large, but still developing, economy, with rich countries such as these.

For one, China started on economic liberalisation at a much later stage than many of these advanced nations and therefore had a shorter runway to tackle poverty. Moreover, China’s wealth must be shared by nearly 1.4 billion people.

When calculated based on GDP per capita, China’s economic situation is far more modest than measures based on its total economy might suggest. 

According to the World Bank, in 2019, China’s GDP per capita (adjusted for purchasing power) would rank it between Suriname and Barbados, and thus classifies China as an “upper-middle income” country, a group that also includes Malaysia, Russia and Thailand.

To measure poverty in these countries, the World Bank adopts a higher standard of US$ 5.50 per person per day—more than twice as high as the standard of poverty that China has set. 

If China’s poverty line had been similar, about a quarter of a billion of its people would have been classified as poor in 2018, as reported by the Center for Strategic and International Studies.

China rural poverty
File photo of rural residents in China doing their washing. China's boom has seen it rise to become the world's second-largest economy, but inequality remains stark. (Photo: AFP / MARK RALSTON)

But even this might not be the most accurate measure of China’s situation.

Even Gansu province - China’s province with the lowest GDP per capita - has an income more than sufficient to categorise it as an upper-middle income economy.

Even if we did compare China’s poorest areas with the standards of a “lower-middle-income” country—like Vietnam or Cameroon—the poverty line should then be set at around US$3.20. This is still about 40 per cent higher than China’s current standard and at where about 40 million people would have been considered poor in 2018.

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But China hasn’t adopted a poverty line that is commensurate with its own level of development, or even with the level of lower middle-income countries, but instead has chosen one that is more in line with that of the world’s poorest nations. For this reason, China’s measure for poverty seriously underestimates the ongoing problem.

Thus, even Xi’s more modest assertion—of eliminating absolute rural poverty—is unlikely to be accurate.

XI’S EFFORTS

In spite of all of this, Xi’s big bet regarding poverty is admirable as it focused attention and billions of yuan in resources on tackling rural poverty.

By design, Xi’s policy offered local governments flexibility to select from a menu of dozens of strategies for fighting poverty—everything from promoting agriculture to workshops providing employment to poor families.

The policy emphasised “precision” poverty reduction by pairing local officials with poor households and requiring these officials to identify and address the specific causes of poverty for each household—and holding them personally responsible for showing results.

A decades-long economic boom pulled millions of people out of poverty but the wealth has yet to
A decades-long economic boom pulled millions of people out of poverty but the wealth has yet to reach all corners of China AFP/Greg Baker

Before the pandemic, I witnessed first-hand the zeal with which local governments responded, prioritising poverty reduction at nearly any cost.

Even if poverty remains greater than zero, China’s poverty reduction has indeed been nothing short of miraculous. 

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However, most of this poverty reduction did not just occur under Xi’s charge. Between 1978 and the mid-1980s, Deng Xiaoping’s rural policies reformed the rural landscape, allowing hundreds of millions of farmers to unlock their potential and—with the help of substantial state subsidies in fertilizer, seeds, and other inputs—emerge from poverty.

A second big wave occurred as Xi’s predecessor, President Hu Jintao, focused attention on rural revitalisation, improving the health care and education systems in rural China, subsidising farming, school fees, doctor visits, and farmer retirements, and cancelling what had been the bedrock of China’s government finance, agricultural tax. 

These policies made modest but substantial contributions to the lives of farmers. Millions more emerged from poverty.

At the most, scholars will likely conclude that the period under Xi represents a third big wave of poverty reduction in rural China.

WHY IT MATTERS

Still, despite these impressive gains, absolute rural poverty remains.

And that is worrying. 

The government insists that after its “final battle against extreme poverty,” that it will continue to focus on “all-round development and common prosperity for all”, which is quite different than specifically targeting poverty.

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Can any local government continue to implement an effective and realistic poverty reduction policy? That question is a major concern for those of us inside and outside of China who worry about poverty.

Although poverty has dropped substantially in China, it will continue to be a persistent problem.

Here, in the year of celebrating 100 years of revolutionary efforts on behalf of the poor is not the time for China to shift its focus away from meeting the basic needs of its impoverished farmers.

John Donaldson, Associate Professor of Political Science at Singapore Management University, has researched rural poverty in China for the past two decades.

Source: CNA/ml