China's Poverty Alleviation and Development: Review and Outlook

　　　　
Fan Xiaojian
Deputy Chief, the Chinese State Council Leading Group of Poverty Alleviation and Development, and Minister, the Chinese State Council Leading Group Office of Poverty Alleviation and Development
　　
October 17, 2007  Beijing,China
　　
 　　
Dear Guests, Ladies and Gentlemen:
　　
　　As the organizing committee of the hosting country, I would like once again to extend our warm welcome to all friends and dear guests. On the other hand, it gives me great pleasure to have this opportunity to share with and exchange our views on the good experience and lessons, and discuss with you about the ways and measures adopted in poverty alleviation. Since the founding of new China 58 years ago, especially since reform and opening up 30 years ago, we have made tremendous progress in poverty alleviation in China. The progress we have made is the result of a sustained economic growth, a series of development policies for social equity and special programs for poverty alleviation taken by the Government. In reviewing and summing up the development of poverty alleviation in China, the fundamental experience is that the Chinese Government has adopted and formulated a series of strategies and policies which have suited for our national conditions in poverty alleviation in different development periods, and we have followed a path of poverty alleviation with Chinese characteristics.
　　
　　Now, I would like to give you a brief account on the measures we have taken in poverty alleviation, the challenges and future expectations in further promoting the undertakings of poverty alleviation for development.
　　
I. Major Achievements and Contribution made by Poverty Alleviation and Development in China
　　
　　The past 30 years has witnessed substantive reduction on the number of rural poor population and encouraging progress of public undertakings in the poor areas. Rural population of extreme poverty dropped from 250 million in 1978 to 21.48 million in 2006, and poverty incidence from 30.7% to 2.3%. Low-income population also went down greatly from 62.13 million in 2000 to 35.5 million in 2006, and low-income poverty incidence from 6.7% to 3.7%. Over the same period, national annual average per capita income of farmers increased by a large margin from 134 Yuan in 1978 to 3587 Yuan in 2006, representing 26.8 times of growth; At the same year, per capita net income of farmers in national priority poverty alleviation and development counties amounted to 1928 Yuan. At the same time, all social undertakings in the poor regions achieved remarkable progress. Some indexes in education and medical care etc. have been approaching the national average. In addition infrastructures in the poor regions have been greatly improved. Yimeng Mountain, Jinggang Mountain, Dabie Mountain and southwestern Fujian have successfully addressed the needs of basic subsistence for local people. Dingxi region of Gansu and Xihaigu region of Qinghai, which ranked among the poorest in history, have also alleviated poverty to a large extend. The poor people built up the spirit of self-confidence, self-determine and self-independence. Remarkable achievements in poverty alleviation and development promoted political stability, social equity, national unity and border consolidation, thus becoming important factor to ensure an enduring social order.
　　
　　Poverty alleviation and development in China also made positive contribution to the world poverty reduction. On one hand, China’s success in poverty alleviation accelerated global progress in poverty reduction, and reversed the trend of constant growing number of world poor population, making China the first country in the world to realize the millennium development goal of halving the number of poor people, and laying a foundation for realizing all millennium goals. On the other hand, as a practitioner of global poverty alleviation undertakings, China actively participated in international activities. The Chinese Government has fulfilled the commitment of “vigorously driving forth south-south cooperation, and gradually increasing development aid to poor countries within our capacity”. In parallel with dynamic actions in implementing UN Summit proposal of supporting accelerated development in developing countries, China-Africa Cooperation Forum and expanding aid to Africa, China established the International Poverty Reduction Center in China along with the international organizations including UNDP in May 2005. On that important platform, China actively carried out training, exchanges and research on international poverty alleviation. We have trained 191 senior and middle-rank officials for 58 countries in total, organized 7 international conferences on poverty alleviation and invited officials who are in charge of poverty reduction, practitioners and researchers from nearly 100 countries and international organizations into china to learn, exchange experence of poverty reduction.
　　
II. Policy Options in Different Stages of Poverty Alleviation
　　
　　Poverty alleviation strategies in different periods have to be coordinated with  economic policies and social development goals, and demonstrated distinctive periodic features. With the reform of national economic and distribution systems deepening and regional development strategies adjusting in different stages, distribution features of poor population, major causes of poverty and structure of poor population have demonstrated different characteristics. The Chinese Government identified effective poverty targeting mechanism, implemented different poverty alleviation strategies, and gradually improved Government’s anti-poverty policy system.
　　
　　The stage of broad-sense poverty alleviation in the planned economic system (1949 - 1977). After the establishment of the People\'s Republic of China, the Chinese Government and the Communist Party of China made great efforts to develop economy and improve people’s standard of living: including to establish planned economic system, to work out development strategy with priority placing on heavy industry, and to launch land reform in the rural areas. Rural cooperative movement and people’s communes were mobilized since 1950s. Meanwhile, system arrangements including collective ownership of major agricultural production materials such as land, mandatory low-price purchase of agriculture products, and even distribution, accumulated capital for industrial development of the country. China has taken positive measures in raising rural productivity, which included launching large-scale infrastructure construction, establishing agri-technology extension service network basically covering the whole country, establishing national rural cooperative credit system, pushing forward rapid development of rural fundamental education and basic medical care, preliminarily setting up rural social security system with focus on rural community’s “Wubao” of five quarantine system and assistant to extremely poor people. These measures contributed to higher rural productivity and better welfare for the rural population, and achieved poverty alleviation in large-scale for the first time in the Chinese history. Nevertheless, due to system loopholes, livelihood of most people, especially rural residents, improved slowly. By 1978, China still had 250 million rural poor people, accounting for 30.7% of rural population at the time.
　　
　　The stage of large-scale poverty mitigation driven by system reform (1978 - 1985). Since 1978, China started the transformation from planned economy to market economy, opened up to the outside world. Household contract responsibility system was established in rural China and people’s commune system was abolished. Reform was also extended to rural distribution system, which used to be centering on “equalitarianism”, and market orientation was introduced into the price formation and distribution mechanism for agricultural products. Dynamic development of urban and township enterprises facilitated transfer of rural redundant labors to non-agriculture industries. Reform made this period the most effective one in the poverty alleviation history in China – rural extremely poor population dropped from 250 million to 125 million, with average reduction of 17.86 million year on year. Poverty incidence went down from 30.7% to 14.8%, averaging 9.4% annually.
　　
　　On the other hand, the Chinese Government began its attempt in poverty alleviation activities. In 1980, the central finance established the “Development Fund for the Assistance to Economically Underdeveloped Regions”. In 1982, the agricultural development project for Sanxi Region, which consists of Dingxi Region and Hexi Region of Gansu Province, and Xihaigu Region of Ningxia Autonomous Region was launched. In 1984, we started the food for work projects which supply goods in kind, and built infrastructures in poverty stricken areas. And in the same year, the Central Committee of China’s Communist Party issued the Circular about Changing the Look of Poverty Stricken Areas as soon as Possible, which defined 18 poverty stricken zones as key areas in poverty alleviation programs. All these measures have generated experiences for government’s planned, organized and large-scale poverty alleviation programs later.
　　
　　1986-2000 represents the stage of development-oriented poverty alleviation, targeting at specific areas with rapid economic growth as the background. As the reform of introducing market economic system has been proceeding, the rural economic growth and the improvement of farmers’ living conditions in areas of poor geographical conditions slowed down, or even became stagnant in some places, and the disparity between these areas and coastal areas in the east increased gradually. Under such circumstances, the Chinese government began to implement its planned, organized and large-scale poverty alleviation and development programs. The major measures includes: establish specific institutions, formulate the strategy of development-oriented poverty alleviation; define the poverty standard and key supporting areas; continue to implement policies of financial assistance like “Development Fund for the Assistance to Economically Underdeveloped Area”, “Food for Work Project”, “Sanxi Development” and etc; and reduce poverty through favorable credit policies. The development-oriented poverty alleviation efforts by the government maintained the trend of reduction of rural population in poverty. By 1993, the rural population of absolute poverty has fallen to 80 million, accounting for 8.8% of the total rural population. Furthermore, in order to quicken the steps in Poverty Alleviation and Development, the Chinese government developed and implemented the “National Eight-Seven Poverty Alleviation Plan”. After seven years of efforts, the goal of providing enough food and clothing for poverty stricken people has been reached in the year of 2000, the rural population living in poverty was reduced to 32 million and the poverty incidence has decreased to around 3%. Poverty has also changed from a widespread phenomenon to the spot phenomenon, the incidence of which showed the pattern of “spot, line and area”, and the type of poverty has changed from absolute poverty to relative poverty.
　　
　　Due to industrial restructuring, transformation of employment system, and reform of distribution system and social welfare system, social differentiation deepened, the income disparity increased, and urban poverty became a prominent issue. By the end of 1990s, the government has roughly established the fundamental framework of urban social security system which mainly includes the subsistence allowance system for urban residents and social security system for enterprise employees which includes old age pension, unemployment, medical care, work injury and maternity insurance. Meanwhile, development-oriented anti-urban poverty policies were adopted with the main approach of reemployment, and actions were taken to provide more job opportunities.
　　
　　Since 2001, China has entered into the stage of Poverty Alleviation and Development in the process of building a well-off society in an all-round way. As the poverty situation changes, the Chinese government promulgated and implemented the China Rural Poverty Alleviation and Development Program (2001-2010), which clearly states: to solve the food and clothing problem for the small number of poverty stricken people as soon as possible, further improve the production and living conditions of poverty stricken areas, and reinforce the poverty reduction achievements. While continuing to carry out the development-oriented poverty reduction and drawing on past experiences, we shall change the focus from poverty stricken counties to poverty stricken villages, adopt the “bottom-up” participatory approach in drafting poverty alleviation plans, and carry out the poverty alleviation work according to the plans. 148,000 villages all over the country were picked out as poverty stricken villages, covering 83% of total poverty stricken population. At the same time, to broaden the channels of obtaining employment and increase income by some measures such as implementing “rain and dew” plan that its content mainly lie in labor transfer to find job in poor districts and industrialization poverty alleviation etc. From 2001 to 2006, the number of people living in absolute poverty has fallen from 32 million to 21.48 million, and the poverty incidence dropped from 3.4% to 2.3%.  A total of 10.52 million people were lifted out of poverty within 6 years, averaging 1.75 million every year.
　　
　　With the establishment of the subsistence allowance system in rural areas by the Chinese government in 2007 as its symbol, a complete anti-poverty policy system encompassing development-oriented poverty alleviation programs, disaster relief, “five guarantees” scheme and “subsistence allowance” scheme. Meanwhile, development-oriented, preventive and relief-oriented anti-poverty policy system for urban areas has also been improved gradually.
　　　
III. Development-oriented Poverty Alleviation Program with Chinese Characteristics
　　
　　Since the reform and opening-up, achievements made in the poverty alleviation in China resulted from profound historical background and indispensable conditions. Ideological emancipation, structural reform, institutional innovation and policy support running through the entire reform program have brought along sustained and rapid economic growth, which have created a favorable macro-environment for large-scale poverty reduction. In this process, the Government of China clearly recognized that market can not benefit all the people automatically while the economic growth and the generalized preferential policy measures cannot solve all the poverty-related problems. Therefore, we carried out a special poverty alleviation program targeted on poor population, which is a development-oriented poverty alleviation program in line with the context of China. The core of this program is government leadership, public participation, self-reliance, development-oriented poverty alleviation and all-round growth.
　　
　　By government leadership, we mean that governments at all levels should put the development-oriented poverty alleviation program on the top of their agenda. Great importance should be attached to this program in the mid and long-term plan for national economic and social development. Since poverty reduction is one of the major responsibilities for governments at all levels, the governing structure should be set up and improved at both central and local governments. The provincial authority is the main player and the responsibilities, tasks, funds and powers are assigned to provinces directly to reduce poverty. The principal leaders of governments at all levels assume the overall responsibility for poverty alleviation work. Governments at all levels should increase capital input for poverty reduction continuously, formulate pro-poor policies and mobilize all social sectors to participate in poverty alleviation.
　　
　　By public participation, we hope to utilize the advantage of socialist system in order to mobilize and organize all social sectors to participate in the development-oriented poverty alleviation program, including provinces and municipalities in coastal areas of China and government and Party agencies at all levels. 6 provinces in East China, 3 municipalities directly under the Central Government and 6 municipalities with independent budgetary status team were assigned to help reduce poverty in 11 provinces, autonomous regions and municipalities. 272 government and Party agencies at central level and large state-owned enterprises (including 116 central government organs and 156 enterprises) were assigned to help reduce poverty in 481 key poverty-stricken counties. All social sectors should be mobilized to participate in poverty alleviation and we hope to promote the cooperation with international organizations, bilateral agencies and international non-governmental organizations to jointly carry out poverty alleviation activities in various forms.
　　
　　By self-reliance, we hope to encourage the spirit of self-reliance and hard work and help the poor people to overcome the common attitude of “waiting for help, relying on the government and requesting aid from others” with the support of all social sectors. They should rely on their own efforts to improve the basic production and living conditions and bring a new look to poor areas. Outdated ideas and concepts of poor farmers should be changed. The poor should be entitled to participate. Efforts should be made to promote the capacity building of the poor while poverty alleviation and development activities should be used to facilitate self-governance of villagers.
　　
　　By development-oriented poverty alleviation, we hope to encourage and organize the poor people to improve their basic production and living conditions, develop economic activities, increase their income and enhance their capacity of self-dependent accumulation and development. Development-oriented poverty alleviation activities include: helping poor villages develop infrastructure for access to road, electricity, mail, radio and television; improving land productivity of poor farmers by developing farmland water conservancy projects; supporting poor farmers in developing crop production, animal production and small-scale processing projects; organizing diversified vocational and technical trainings to introduce new agricultural technology and practices; and developing large-scale labor transfer and voluntary relocation of farmers and creating job and development opportunities.
　　
　　By all-around development, we hope to fight poverty in an all-around way according to the requirements of the Scientific Outlook on Development, combining development of natural and human resources as well as development-oriented poverty alleviation and environmental conservation. “General Popularization of Nine-Year Compulsory Education and General Elimination of Illiteracy among the Adults”; Providing free textbooks and exempting extra charges for all the students from poor rural families throughout the country who enjoy the compulsory education at the primary and secondary schools and subsidizing living expenses for the poor in boarding schools; gradually setting up a new type of rural cooperative medical care system which takes treatment of serious diseases as its main responsibility; actively urging poor rural families to have fewer children and get rich as soon as possible; convertting farmland for forestry and carry out other large-scale projects; establishing the rural minimum cost of living allowance system and so on.
　　
　　The development-oriented poverty alleviation program with Chinese characteristics is the result of practices in China over these years and constitutes an important part of international anti-poverty endeavors.
　　
IV. Challenges and Prospects
　　
　　Since the beginning of the new century, the Chinese government has put forward the people-oriented scientific outlook on development and the goal of building a harmonious socialist society and implemented the strategy of coordinating development among different regions and between urban and rural areas and getting support for agriculture and rural areas from industry and urban areas on the basis of new situation, new features and new issues in the social and economic development. These new development concepts and goals have further indicated the direction, created favorable environment and also set higher requirements for the work on poverty alleviation.
　　
　　Meanwhile, the development-oriented poverty alleviation in China is confronted with a number of inevitable challenges. 1) Huge poor population and entrenched poverty. By 2006, 21.48 million rural people in absolute poverty had not obtained adequate food and clothing and another 35.5 million rural people had obtained adequate food and clothing but lain in very low development level with very low income. These two groups of people added up to 56.98 million, accounting for 6% of the total rural population. The population of such two groups of people in the western region took up 13.7% of the total there. These people are characterized by extreme poverty, poor development conditions and capacity, high poverty recurrence rate and great difficulties in poverty elimination. The poverty line is relatively low in China. If the “a dollar a day” standard of the World Bank was applied, the poor population in China would exceed 100 million. 2) Development in poor areas still lagging behind. Basic agricultural production conditions, community infrastructure and social service and fundamental industrial development in poor villages are lagging far behind those in other areas. Special poor areas, such as old revolutionary bases, inhabited areas of ethnic minorities, stone-mountain areas, deserts, alpine areas, loess plateau and areas of high endemic incidence, are characterized by lagging development, high operational costs, huge difficulties and rising demand for relocating the residents. 3) Increasing factors leading to poverty. In addition to natural hazards and personal reasons, cases of poverty or poverty recurrence caused by the impact of market risks, environmental policies and some other factors on the traditional livelihood of some farmers are increasing.
　　
　　Further more, there are still some other Challenges: socio-economic development is unbalanced; the development of public service and social security system falls behind; the conflict between natural ecology and economic development is prominent; the implementation system of social development and poverty alleviation policy needs to be improved and the efficiency of poverty reduction must be improved immediately, etc.
　　
　　Facing these challenges, we still have a long way to go for poverty alleviation in China. The Chinese government has made it clear that poverty alleviation and development is a historical task in building socialism with Chinese characteristics, and an important component in building our socialist harmonious society. If China want to achieve the goal of year 2020 overall constructing “well-off society”, it must enhance poverty alleviation further and to help poor districts and the poverty population to keep up with whole countriy development speed.
　　
　　The objectives and priorities of development-oriented poverty alleviation in the next three years are as follows: efforts shall be intensified to provide sufficient food and shelter to rural poor; try to accomplish the village-based poverty alleviation plan; provide the access to television in administrative villages, access to highway in places where conditions permit, access to electricity in natural villages; further improve drinking water supply for human and animals and improve medical care system, popularize the nine-year compulsory education in an all-round way. Based on the new characteristics and development of poverty as well as the requirement of scientific development concept and building a harmonious society, new poverty alleviation plan will be formulated in line with local conditions and new policy measures will be adopted.
　　
　　We are full of confidence about the future of the development-oriented poverty alleviation in china. In the forthcoming period of time, we will continue to create favorable macro-environment and sound development basis for poverty alleviation. Our government tries to promote a sustained and fast development of national economy, promote coordinated socio-economic development; improve urban and rural social security and assistance system; realize harmonious development of economy and nature. We will adhere to the guideline of “industry promoting agriculture, urban areas promoting rural areas”, promote modern agriculture construction, strengthen the industrial basis, promote the sustained increase of farmers’ income and improve physical conditions for rural development; accelerate the development of social undertakings, bring up new type of farmers to push the construction of a new socialist countryside. We hope to gradually realize a coordinated socio-economic development in urban and rural areas.
　　
　　To the request of the development-oriented poverty alleviation, china will continue to adhere unswervingly to the development-oriented poverty alleviation approach, with the combination of development and security, continue to adhere to the fundamental experience of Development-oriented Poverty Alleviation Program with Chinese characteristics, and effective policy measures.We would make further efforts to innovate in resource consolidation mechanism, increase investment for poverty alleviation, innovate the reforms, and improve funds management to gain better investment. steadily resolve the food and shelter problems of poor people, meet the basic needs of the people, improve people’s income and self-development capacity, and let the poor people benefit from the achievements of reform and development.
　　
　　China will continue to actively participate in the global poverty alleviation course and to provide assistance to other developing countries within our own capacity for common development. At the same time, we will make full use of the platform provided by the International Poverty Reduction Center in China, together with other countries and international organizations, on the basis of equality, mutual benefit and common development, to carry out exchanges, experience sharing, and pragmatic cooperation, and make unremitting efforts to realize the objective of equal development in the world.
　　
　　Thank you for your attention！