A farmer feeds the cattle. After 2020, the population in relative poverty will constitute the main part of the poor in China. Photo: FILE

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The report to the 19th CPC National Congress stressed the importance of winning the battle against poverty, making it clear that by the year 2020, all rural residents living below the current poverty line will have been lifted out of poverty.

It is sometimes misunderstood that, after 2020, the more than 1.3 billion Chinese people will be well fed and clothed, so there will be no more poverty to be alleviated then. But that is not the case. The poverty reduction strategy after 2020 is of great significance to accelerating economic growth in the approaching well-off Chinese society and to realizing the Two Centenary Goals.

 

Poverty: a relative concept
Poverty is a social phenomenon. It refers to a state in which material resources are scarce or deprived, characterized typically by the inability to afford the basic necessities of life. However, poverty can be categorized into absolute or relative.

In absolute poverty, individuals and families in a certain mode of social production and life are unable to meet basic needs for survival with earned and other legitimate incomes. Relative poverty occurs when a person who lives in a given country does not enjoy a certain minimum level of living standards as compared to the rest of the population of that country.

Causes for poverty are multifaceted, including resource allocation and unreasonable wealth distribution, as well as personal inertia, disability and powerlessness. With socioeconomic development, the characteristics of relative poverty will be increasingly prominent, and the scope of poverty will extend to intellectual, cultural and even psychological levels.

The “poverty line,” a globally used standard to define poverty, is a dynamic reference criterion itself. It is inseparable from the level of socioeconomic development in each country and region.

In 2008, the World Bank defined the international poverty line as $1.25 a day, and they reset it to $1.90 a day in 2015. Currently the standard adopted in China is benchmarked against the constant of 2,300 yuan for rural per-capita annual income (about $1 a day) that was set in 2010.

If we measure based on the upper limit of the international poverty line at $3.60–$3.80 a day, many people will remain poor in China after a moderately prosperous society is built in 2020. Even if poverty is reduced in light of the upper limit, the Chinese government still has a lot to do compared to the higher poverty thresholds of high-income countries and regions.

China’s poverty line has been adjusted irregularly. Since the first poverty line was set in 1985, the threshold has been frequently updated according to changes in the price index: 206 yuan for per-capita annual income in 1986, 785 yuan in 2007, 1,067 yuan in 2008, 1,196 yuan in 2009, 2,300 in 2011, 2,800 yuan in 2014 and 3,200 yuan in 2017.

By convention, people in China are defined as poor when their net incomes per capita are lower than the poverty line of that year. However, consumption levels vary greatly as the economy develops fast, as household income from properties grows quickly, as the Engel’s coefficient decreases year on year, and as spending on health care, education, communication and durable consumer goods increases. Under such circumstances, it is inadequate to define poverty based on income.

Moreover, after 2020, the population in relative poverty will constitute the main part of the poor. Their poverty might be attributed to the widening urban-rural income gap, imbalanced regional development, low individual qualities, unemployment, disasters and diseases.

Regarding relative poverty, urban poor people need more attention than the population in rural areas. The advancement of urbanization has enlarged the size of the population of the relative poor living in cities. Studies show that a lack of new job opportunities might be a crucial reason for the existence of the urban impoverished population. Meanwhile, migrant workers might become a new poverty-stricken group in urban areas.

As relative poverty will be predominant after 2020, “anti-poverty” is a more appropriate term than “poverty alleviation” to describe the long-term cause.

 

Evolution of China’s anti-poverty strategy
Changes in the size of the poor population caused by adjustments to the poverty line are surface phenomena. During poverty eradication in China, new changes have taken place in the structure, regional distribution, social development opportunity and intergenerational transmission of the population. These new changes have broken through the traditional survival-based definition of poverty and underscored the necessity of sustainable development for the population, posing new challenges to China’s transition to anti-poverty after 2020.

Since it implemented the “Seven-Year Priority Poverty Alleviation Program” in 1994, China has made major adjustments to the strategy many times, from broad to targeted, and from relief- to development-oriented poverty alleviation.

In 2007, China made another substantial change to its poverty reduction strategy, from regional development-oriented poverty alleviation to a strategy integrating social insurance and development, and from single-program to comprehensive poverty reduction. The target also shifted from regions to poor counties and further to poor villages.

Starting from 2013, the overall poverty alleviation drive has evolved into a targeted one to make the strategy more effective and to ensure that the goal of building a moderately prosperous society by 2020 is achieved as scheduled.

At the same time, in terms of the decision-making mechanism in poverty alleviation, all tasks, responsibilities, funds and power are delegated from the central government to provinces and from poor counties to democratic villagers. Social organizations, beneficiary groups, and the market have also gradually joined in the government-led poverty alleviation campaign.

With the development and change in the world situation and national conditions, China’s anti-poverty work after 2020 will change significantly in subject, theme, conditions, environment, standards, targets, contents, scope, scale, model and path. Eradicating relative poverty will be the primary mission so as to consolidate the well-off society and quicken the realization of common prosperity. Among other objectives, improving the sustainable self-development capacity of the poor, further narrowing the income gap and ameliorating the ecological environment are vital.

 

Sustainable self-development matters
Since the 1990s, development economists represented by Amartya Sen have proposed a development theory system centering on capability, right and welfare, building a capability-based outlook on development. Sen defined poverty as a lack of capabilities, instead of lack of income.

On this basis, the United Nations Development Programme put forward a new index to measure poverty in the Human Development Report of 1997 called “capability poverty,” which includes the capability to obtain nutrition and health, the capability of reproductive health, and the capability to receive education and acquire knowledge.

According to the capability approach, a lack of opportunity, disease, low education quality, and a weak social insurance system are significant factors that strip people of their earning capacity and mire them in poverty. China should shift the focus of its anti-poverty strategy to improving education and health levels and enhancing poor individuals’ abilities to obtain income and prevent and cope with the risks of falling into poverty.

The entire Chinese society should be soberly aware that striving for anti-poverty will remain a crucial task in socioeconomic development for a long time in the future, even after the moderately prosperous society is established in 2020. The focus will transition to poverty prevention. The key is to create opportunities, improving conditions and individuals’ sustainable self-development capabilities.

Learning is one of the ways to strengthen sustainable self-development capabilities. Efforts should be made to promote participatory poverty alleviation, guiding poor individuals to learn in practice and lift themselves out of poverty by advancing their capabilities.

Previous experience indicates that “institutional poverty” is as prominent as capability poverty. Indeed some poverty stems from unreasonable institutions and mechanisms. Hence it is critical to correct impractical systems and formulate laws to upgrade sustainable self-development abilities and national qualities to provide effective capability compensation and supporting measures.

 

Lei Ming is director of the Institute on Poverty Research at Peking University and a professor from PKU’s Guanghua School of Management.

(edited by CHEN MIRONG)