Achieving shared prosperity: China’s poverty alleviation struggle

Chinese literature giant Lu Xun once described the social condition in China as Pre-Modern, Modern and Post-Modern. He believed that the social division in Chinese society was so huge that people from different class of the society had different aspirations. For example a person from the Post-Modern society might want to have more democracy and liberty meanwhile a person from the Pre-Modern society might just want to survive and make a living. This harsh reality of the Chinese society makes the governance of China such a difficult mission to accomplish. Chinese people have always had a desire to achieve an equal distribution system and social equality. Chinese thinker Confucius once famously said ‘Inequality, not scarcity, that persecutes governors; anarchy, not poverty, that haunts them.’ This wisdom from Confucius reflects this strong desire to achieve equality for all people.

Since the Opening Up and Reforms Policy in 1978, China has experienced an unbelievable pace of development. The overall strength of China has greatly been improved and people’s standard of living is gradually rising. However, there is still an imbalance in development between the Eastern coastal areas and the Central and Northwestern inland areas. There is also a massive gap in human development index between the rural and urban areas of China. Since the start of the economic reforms in 1978, Chinese leader Deng Xiaoping emphasised during multiple occasions that China is pursuing a pathway of shared prosperity for its citizens, polarisation will not be acceptable and decision makers must be aware of the danger of it. And therefore in 1986, China sets its first poverty line in terms of yearly income at 206 yuan. This is the first time in modern Chinese history that the country was taking poverty as a major political and economic issue to tackle. Both Deng Xiaoping and his advisers believed that economic development was the only way to lift the struggling population out of poverty. Development is the hard reason and a shared development for all is the goal.

The poverty population in China went down from 770 million people in 1978 to 30.46 million people in 2017. 70% of poverty alleviation in the world was contributed by China. What are some of the reasons behind this major success on poverty alleviation? China’s unique political system was a major factor behind this success. Given the fact that China is a centralised state where the power of the provinces come from the political centre. It is possible for the provinces to work together with each other under the guidance of the party centre. Provincial cooperation and coordination are a major part of China’s poverty alleviation mechanism. The provinces that are economically developed have a responsibility to help and support those that are less economically developed. This cooperation link was established under the direction of the party centre. Many of the enterprises from southeastern coastal areas such as Fujian and Guangdong went to the less economically developed provinces such as Gansu and Qinghai to establish branches that could help the local citizens. Many of these enterprises provided great employment opportunities for the local residents that could increase their annual income and also assisting the local community on discovering its unique advantage in the market. For example many of the western inland areas of China are good locations for vine cultivation and therefore some of the businesses choose to invest in the vine plantation industry there.

Chinese economy is also dominated by state-owned enterprises. Under the direction of the central government, many of these state-owned enterprises were asked to assist the provinces on poverty alleviation. Many of these enterprises formed partnerships with local counties on improving infrastructure level, more accessibility for funding and capital from the financial institutions and also more direct investment from the enterprises into the regions that are in poverty. At the end of day, poverty alleviation could only be achieved through the collaboration between the public and private sector. However, the will of the state is absolutely crucial as well. Given the nature of the Chinese society, poverty alleviation requires a major force on coordinating all of the resources that are available and also setting separate targets for different regions and provinces. This major force also need to supervise all of the current projects and the updates. This is when the unique political system in China provides the government with support when it comes to this important responsibility.

Under the current Chinese government, the criteria for lifting out of poverty include what are called “two assurances and three guarantees,” which require ensuring adequate food and clothing, and access to compulsory education, basic medical services and safe housing. In 2020, the Chinese government has also changed the poverty line from 2,300 yuan to 4,000 yuan in 2020. The poverty line must be adjusted according to the level of inflation as it must reflect the real purchasing power of people’s income. As China’s standard of living gradually improves, the boundary of the poverty line must get higher and in accordance with the general development of the country.

At the end of 2020, China has successfully achieved the goal of eliminating extreme poverty. Nearly 100 million people in rural areas who had lived below the poverty line all shook off poverty and all 832 designated poor counties, mostly in central and the western regions, were also out of poverty. What China has accomplished on poverty alleviation in the past 40 years is impressive. The main duty of a government is to make sure its citizens are living in happiness and without fears. Now China must also be working hard on sharing some of its experiences on poverty alleviation with other developing countries and together we can build a shared future of humanity for our posterity.