Poverty in China

In China today, poverty refers mainly to the rural poor as decades of economic growth has largely eradicated urban poverty. The dramatic progress in reducing poverty over the past three decades in China is well known. According to the World Bank, more than 500 million people were lifted out of extreme poverty as China’s poverty rate fell from 88 percent in 1981 to 6.5 percent in 2012, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms.

Since the start of far-reaching economic reforms in the late 1970s, growth has fueled a remarkable increase in per capita income helping to lift more people out of poverty than anywhere else in the world: its per capita income in increased fivefold between 1990 and 2000, from $200 to $1,000. Between 2000 and 2010, per capita income also rose by the same rate, from $1,000 to $5,000, moving China into the ranks of middle-income countries. Between 1990 and 2005, China’s progress accounted for more than three-quarters of global poverty reduction and a big factor in why the world reached the UN millennium development goal of halving extreme poverty. This incredible success was delivered by a combination of a rapidly expanding labour market, driven by a protracted period of economic growth, and a series of government transfers such as an urban subsidy, and the introduction of a rural pension. Independent studies by Gallup indicate the poverty rate in China fell from 26% in 2007 to 7% by 2012, although World Bank extrapolations suggest that the percentage of the population living below the international poverty line continued to fall to 4.1 percent in 2014.

At the same time, however, income disparities have increased. The growing income inequality is illustrated most clearly by the differences in living standards between the urban, coastal areas and the rural, inland regions. There have also been increases in the inequality of health and education outcomes, and increased attention to unequal outcomes for ethnic minorities. To alleviate the situation, the Chinese government shifted its policy in recent years to encourage urban migration, fund education, health, and transportation infastructure for poor areas and poor households. In addition the government is attempting to rebalance the economy away from investment and exports toward domestic consumption and public services, to help reduce social disparities. Relocation of the poor from poverty stricken regions to more developed urban areas is also being implemented as part of the holistic plan to tackle rural poverty.

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Wikipedia