China has reduced the number of its rural poor by almost 70 million people over the past decade, a new government white paper has claimed.
The paper, the first released on poverty since 2001, attributed the steep decline to the effectiveness of a series of subsidies for China's farmers, including the removal of agricultural taxes and a new social security assistance programme. Despite fast-declining rural poverty, the report also warned of new — and, analysts said, harder to address — developmental challenges as a result of increasing inequality between the countryside and cities.
The number of rural poor had declined from 94.22 million in 2000 to 26.88 million in 2010, or 2.8 per cent of the rural population today. Behind the decline, said the paper, were several pro-farmer measures, particularly the abolishing of agricultural taxes in 2006, which was part of a series of rural reforms unveiled during the mid-2000s, shortly after the Hu Jintao-Wen Jiabao administration took over following a decade of rapid, but increasingly uneven, urban-focused growth.
The central government's spending on agriculture in this time rose from 214.42 billion yuan ($34 billion) in 2003 to 857.97 billion yuan ($136 billion) last year — an annual 22 per cent increase. Much of this spending went to a development programme that targeted 592 of the poorest counties. The programme, said the paper, helped increase farmland by 3.5 million hectares in these counties, as well as renovate and extend roads by 952,000 km.
Fiscal budget
Another key measure behind the decline was the setting up of a nationwide rural social assistance system in 2007, which now covers 35 million rural Chinese, said Zhang Yuan, a professor of development economics at the China Centre for Economic Studies (CCES) in Fudan University.
“The central and local governments have financed about two-thirds of the premiums,” he told The Hindu . “The money was from the government fiscal budget and especially helpful for the poor to cover medical expenses, and for the old to keep up their living standards.”
The Chinese government's definition of poverty includes those who earn less than 1,274 yuan a year (or Rs. 10,192). The government's definition has been seen by some analysts as too low, but Mr. Zhang said the government had in recent years set a higher low-income line.
The poverty and low-income lines, since the mid-1990s, were set by the government with the World Bank's help, and also took inflation into account, he said.
Underpinning the decline in poverty has been fast rising government investment in rural areas, made possible by China's three-decades of high growth. In 1981, when reforms were just beginning, poverty in rural China stood at 18.5 per cent. According to a World Bank report on China's three-decade record in tackling poverty, the absolute number of poor in China has fallen in this time, from 652 million to 135 million — a decline of over half a billion people. The World Bank report identified the introduction of the Household Responsibility System in agriculture in the early 1980s, which replaced communes, and the subsequent emergence of Township and Village Enterprises, as a key reform. However, while poverty had declined, rising inequalities between urban and rural areas were a new pressing concern, both the government white paper and World Bank report warned.
Some measures which had helped bring growth, such as marketisation, had now left a legacy of rising health and education costs, particularly in rural areas. A urban resident earns more than 3.3 times a rural one in China today, with the Gini income inequality index rising from 30.9 per cent in 1981 to 45.3 per cent in 2003.
“The main reason for the enlarging rural-urban gap is the unbalanced development strategies adopted by Chinese government from the early 1950s which give priority to the development of heavy industries,” said Mr. Zhang of CCES.
“More equal chances of sharing public goods between rural and urban citizens and the elimination of job and wage discrimination against migrating peasants in urban labour markets are badly needed to deal with the enlarging rural-urban gap.”
“The government,” he added, “should keep one eye on reducing poverty and the other on mitigating inequality.”
