The Chinese government has made great efforts to reduce poverty in recent years, but the gap between the rich and the poor in urban and rural areas is still widening. Analysts say that contradictions in official policies have created an imbalance in the distribution of income and become the root cause of rural poverty, a problem that cannot be truly lifted out of poverty if it is not addressed.
The World Bank has used the extreme poverty standard of $1.90 per person per day since 2011, which is the minimum standard after converting food and goods necessary to sustain survival into money. China declared full poverty eradication in 2020. Officials say that 98.99 million rural poor people will all be lifted out of poverty under the current standard, 832 poor counties will all be removed from the list and 128,000 poor villages will all be released. According to media reports, China’s own definition of the poverty line is $2.30 per person per day, adjusted for inflation, since 2010.
Many experts have questioned China’s claim to have fully eradicated poverty. Behind the official claim that “overall regional poverty has been solved”, it is indisputable that the gap between the rich and the poor between urban and rural areas is gradually worsening.
According to China’s National Bureau of Statistics, the annual per capita income in 2020 will be 43,834 yuan in urban areas and 17,131 yuan in rural areas, and if we compare this with the “war against poverty” that started at the end of 2015, we can see that rural life has indeed improved over the past five years, with a 50% increase in income, even greater than the 40% increase in urban income. However, the gap between urban and rural incomes has also widened, with a 35% increase over the past five years.
Policy contradictions cause imbalance in distribution
Speaking to Voice of America, Liu Mengjun, director of the Mainland Institute at the Chinese Academy of Economic Research in Taiwan, said that given China’s overall economic output, it is in a good position to move toward a well-off society if it can achieve a balanced distribution of income. According to him, China’s poverty problem is not a problem of economic growth, but a problem of income distribution, but the policy contradictions make the income distribution even more unbalanced.
According to Liu, the first policy contradiction is that China’s economic development strategy and industrial development model are increasingly dependent on high-tech and capital-intensive industries, with higher returns for high-intensity labor and capitalists, which worsens the distribution of income, i.e., when government resources are biased toward global strategic industrialization, local agricultural resources are naturally sidelined by policy.
Analysts say that setting a red line for arable land protection has become the second policy contradiction for rural economic development. China People’s Daily reported on June 16 that in order to ensure food security, the first thing is to implement the strategy of “hiding food in the land” and must strictly guard the red line of 1.8 billion mu of arable land.
However, experts say that the output within the red line is to meet domestic demand, focusing on national food security, by the government to buy food, so the price of agricultural food can not be raised, the income of farmers may become a hindrance. Coupled with the pressure of imported food, which may reduce domestic demand for food, even if the price of imported food is raised, there may not be a correlation with domestic farmers to improve their income.
Experts also pointed out that the Chinese government often uses subsidies in order to strengthen the effectiveness of its policies, and this system will make the distribution of income even worse, because the government subsidizes some high-tech industries, making high-tech industry groups get higher returns, and the gap between the rich and the poor in urban and rural areas is even wider.
In addition, many local governments derive their income from land finance, and therefore do not want land prices to fall in order to secure revenue. Experts say that when land prices are soaring, cities with more land will get more revenue through land auctions or leases. City dwellers who own homes and entrepreneurs who use commercial and industrial land are also enriched as a result. In contrast, urban land continues to rise, but rural land and forest land cannot be converted to more marketable uses. For the sake of local government land finance, the price of urban land has been maintained in recent years, which has widened the gap between the rich and the poor in urban areas.
Liu Mengjun said: “The whole poverty problem in China comes from many institutional design or policy practices that cause imbalance in its income distribution, which will make more poverty problems more prominent. It reached the so-called 13th Five-Year Plan for a well-off society or the goal of building a party for 100 years last year, which is in fact a problem hidden behind many statistics, because these contradictions are still not resolved now.”
Urban poverty black numbers may be hidden
The black number of urban poverty may be one of the numbers being hidden. Zhou Qi, a German writer who has long been concerned about China’s household registration system, said that China announced in 2018 that the migrant workers’ mobile population is more than 200 million people, and these are long-time residents living in cities, but the vast majority of them do not have urban household registration and work odd jobs, with no job security and no access to urban healthcare, pensions and insurance.
According to official statistics, in the first quarter of 2020, the minimum living standard in Beijing was 1,170 yuan per capita per month for families, totaling more than 60,000 households and 100,000 people. If we add migrant workers without household registration, the urban population in need of support is bound to be more and more. However, these people cannot apply for the low-income subsidy because they do not have household registration.
“They can’t even enjoy the basic security of 1,170 yuan per month, that is to do a day there is a day, the urban poor population statistics, they are not used as a statistical sampling, which is a big problem.” Zhou said.
Although the core bottom line of China’s rural poverty alleviation is “one over, two not worried, three guarantees”, refers to the annual income of more than 4,000 yuan per person, not worried about food, not worried about clothing, as well as compulsory education, basic medical care and housing security. Some experts say that in many cases, rural areas meet the formal requirements for poverty alleviation, but in reality it is a “cosmetic project” that does not stand up to careful scrutiny.
A Chinese economics professor, who asked not to be named, told VOA, “Poverty eradication is a political task under China’s national system, and to announce that China as a whole has eradicated poverty at a certain point in time is actually not a very scientific statement, because this year is the 100th anniversary of the founding of the Party, and [the announcement of poverty eradication] is related to the 100th anniversary celebration.”
Face-saving projects to lift rural areas out of poverty
The scholar said that many rural areas, in order to political achievements, rushed to meet the standards in a short period of time, although the construction of new houses, but no water available in the house, farmers simply can not live, and finally moved back to the original old house to live, or else have to travel a long way, using various means of transport to bring back a week of water, this is not an isolated case. She said that rural areas are lifted out of poverty after a short period of acceptance, but whether an endogenous mechanism for sustainable development can be established is the indicator of true poverty eradication.
Liu Mengjun, director of the Mainland Institute of Taiwan’s Chinese Academy of Economic Research, also said: “A short period of time to put policy resources in the rural areas, the poor rural hat off, the rural areas have been upgraded a grade, the income inside the entire rural areas have been raised. Then down the second year, then all the financial resources may be gone, will no longer go in, then maybe this rural area will go back to it poor rural areas again.”
According to Zhou’s research, Datong County in Shanxi Province had 280,000 people 50 years ago, 350,000 10 years ago, and 220,000 in the recent census, while the actual population was about 160,000. Datong used to have 16 enterprises and more than 4,000 industrial workers 10 years ago, but now all these workers have disappeared and the industries are all bankrupt.
Zhou said: “In the future, if the government does not engage in political campaigns in the form of contracting or targeted poverty alleviation, what will these 160,000 people rely on in the future to get out of poverty? This will lead to a vicious thing, there is a famous proverb is to say, officials now need to rely on poverty to promote, then I will help you hard, once this wind is over, I will take it as a discard not used, is ‘used to hold in the arms, do not use to push to the cliff’.”
The unnamed Chinese scholar said poverty is a concomitant problem in economic development and is a dynamic concept, not a static one. Although China’s poverty line is slightly higher than the absolute poverty line of $1.90 a day set by the World Bank and lower than the $5.50 a day in upper-middle-income countries, China is already an upper-middle-income country and should adopt a higher standard to define poverty.
Expert: China should look to developed countries
The scholar said that if the standard of absolute poverty is followed, there may be no poor people in most European and American countries. But in fact, the U.S. government admits that 17 percent of the population is poor, and the U.K. has about 17 percent, or 11 million people, considered poor, because these developed countries have adopted a higher standard of “relative poverty” indicators.
Relative poverty, according to the World Bank, is defined as less than one-third of the median national income. China’s median disposable income per capita in 2020 is 27,540 yuan. According to this standard, a person with an annual income of less than 9,180 yuan is considered poor, which is more than twice the 4,000 yuan per year standard for poverty eradication in China, and highlights that the current definition of poverty in China is too low.
The scholar said that China, which has become the world’s second-largest economy in terms of GDP economy since 2010, can no longer overdraw many welfare benefits by pursuing economic growth as it did before, and should have to move to the next stage and pursue the corresponding level of improvement in people’s livelihood.
She said, “If you think that in 2021 China has solved the problem of overall poverty, that is, the problem of absolute poverty, then your next task is to set the relative poverty line and the supporting policies a proposed, it should be on par with the developed countries!”