2% of GDP is used for “blood transfusion”: doubts in the Communist Party of China’s commendation conference on poverty eradication

A person is considered to be “out of poverty” if his or her annual per capita income exceeds 4,000 yuan

On Feb. 25, Communist Party President Xi Jinping delivered a speech at the national summing-up and commendation conference on poverty eradication, announcing that 98.99 million rural poor people had been lifted out of poverty under the current standards, and that “overall regional poverty has been solved, completing the arduous task of eliminating absolute poverty.”

In his speech, Xi pointed out that in the past eight years, the income level of the country’s poor has increased significantly, and all of them have achieved “two worries and three guarantees”, that is, the poor do not worry about Food, do not worry about clothing, compulsory Education, basic medical care, housing security is guaranteed, and drinking water safety has also been guaranteed.

Poverty line slightly below international standards

According to the World Bank’s current standard, living expenses below US$1.9 per person per day is considered “extreme poverty”. The standard for poverty alleviation in mainland China is an annual per capita income of 2,300 yuan at constant 2010 prices. According to Liu Yongfu, director of the Communist Party of China State Council’s Leading Group Office for Poverty Alleviation and Development, in March last year, this is equivalent to about 4,000 yuan in 2020 dollars, or about $1.70 per person per day. Liu Yongfu also revealed at the Time that “the income per capita of those who have already escaped poverty are above 9,000 yuan ($3.80 per person per day), and the income per capita of the remaining poor is above 6,000 yuan ($2.50 per person per day).”

It is worth noting that Chinese Communist Party Premier Li Keqiang once publicly stated at a meeting of the National People’s Congress in May last year that there are still “600 million people with low and middle incomes and below on the mainland, and their average monthly income is only about 1,000 yuan.” In other words, nearly half of China’s population has a per capita daily income of less than $5.10.

According to the U.S. Census Bureau, a single person earning less than $17.48 per day and a Family of four earning less than $8.97 per day is considered “extremely poor. However, because of the difference in purchasing power between the U.S. and China, the two countries’ extreme poverty lines are not directly comparable.

Migrant workers living on the outskirts of Beijing watch Xi Jinping’s speech during the Lunar New Year

2 percent of GDP invested in anti-poverty campaign

In his speech on Thursday, Xi also mentioned that the economic strength and infrastructure of poor regions have also been significantly improved.” 1.1 million kilometers of rural roads have been newly reconstructed, and 35,000 kilometers of railroads have been added. The reliability rate of power supply in rural networks in poor areas reached 99 percent, the proportion of poor villages within the coverage of large power grids connected to power electricity reached 100 percent, and the proportion of poor villages connected to fiber optics and 4G both exceeded 98 percent. 7.9 million households and 25.68 million poor people had their dangerous houses renovated, 35,000 centralized resettlement areas and 2.66 million sets of resettlement housing were built, and more than 9.6 million people ‘moved out of their poor nests’, got rid of their isolation and backwardness, and moved into their new homes.”

Xi also revealed that in the past eight years, the central and local governments have invested a total of nearly 1.6 trillion yuan in special poverty alleviation funds, in addition to “more than 440 billion yuan in inter-provincial transfer of land increase/decrease indexes and intra-provincial transfer funds, more than 710 billion yuan in poverty alleviation micro-credits, 668.8 billion yuan in poverty alleviation refinancing loans, and 9.2 trillion yuan in financial precision poverty alleviation loans. The nine eastern provinces and cities have invested more than 100.5 billion yuan in financial assistance and social help to the poverty alleviation collaborative areas, and enterprises in the eastern region have invested more than 1 trillion yuan in the poverty alleviation collaborative areas”.

According to the above figures disclosed by Xi Jinping, it means that all sectors of society in mainland China have invested at least 13 trillion yuan in poverty alleviation in the past eight years. During the same period, the CCP’s GDP totaled about 641 trillion yuan, accounting for 2.03 percent of the total.

Is the “massive blood transfusion” sustainable?

The extremely high investment in poverty alleviation has also raised concerns about the sustainability of the CCP’s “massive blood transfusion” campaign to combat poverty. On the mainland Chinese social networking site Zhihu, some users involved in front-line poverty alleviation work worry whether poor areas will still have enough resources and capacity to develop themselves once the high level of external investment is withdrawn. Will poor areas be able to afford the low utilization rate and high operating costs of many of the high-standard facilities built with external assistance? How to solve the debt risk in some areas caused by high investment in poverty alleviation? How can short-term policies be transformed into a long-term universal welfare system? Some other mainland netizens even suspect that the authorities concerned have directly given money to poor households in recent years, thus forcing the annual income level above the poverty line.

Two months ago, the New York Times also published a lengthy report arguing that mainland China’s “campaign to eradicate poverty” was costly and unsustainable. The newspaper’s reporter “visited six Gansu villages without government surveillance” and confirmed that the Communist authorities “are paying a high price for poverty alleviation. This approach relies on large and potentially unsustainable subsidies to create jobs and build better housing.” The report also quotes Martin Raiser, director of the World Bank’s Communist Party Bureau, as stating, “We are convinced that the Communist Party has succeeded in eradicating absolute rural poverty – but we are not so sure that this is sustainable or cost-effective, given the resources mobilized.”

At the Feb. 25 commendation ceremony, Xi did not mention these concerns much, saying only in general terms that he wanted to shift from “blood transfusion” poverty alleviation to “blood-making” assistance; “to make the foundation for poverty eradication more solid and the results more sustainable. To strengthen the monitoring of the population prone to return to poverty, early detection, early intervention, early assistance. The industries in the areas out of poverty should be cultivated and supported for a long time to promote endogenous and sustainable development.”