By Weng Shiyou, Wang Biqiang
Published: 2008-04-17

From Cover, issue no. 363, Apr. 14, 2008
Translated by Zuo Maohong
Original article

An additional 40 million Chinese may wake up one morning to find out they are, officially speaking, destitute.

A poverty relief draft policy proposes to raise the benchmark by which poverty is defined to 1,300 yuan (185 dollar) of annual income, as opposed to the present 1,067 yuan (152 dollars).

If approved by the State Council, the size of Chinese population being classified as living in poverty would double to 80 million from the current 40 million, according to an official from the Poverty Alleviation Office.

The new standard – which takes into consideration both income needed to maintain basic living, and access to education, healthcare and social security – is said to be the first in China that is meeting the international benchmark of one-dollar daily income based on actual purchasing power.

Raising the Bar
In 1985, the Chinese government set the poverty line at 200 yuan (28 dollars) per capita annual income. Since then, the benchmark had been inching up according to the country's price index. Subsequently, an critical poverty line was added. At present, the latter was set at 786 yuan (112 dollars), and the former at 1,067 yuan (152 dollar).

The poverty line set by China has long been considered too low, and lagging behind the benchmark set by the World Bank.

The China Development Research Foundation deputy general secretary Tang Min said there was an urgent need to adjust the benchmark.

"The most important task of poverty alleviation is to find the target population, and the key to finding them is to identify and fix the poverty line," Tang said, adding it was unreasonable to adhere to a low criteria when the country's GDP per capita was already ten times that in 1985.

At the 17th National Congress of the Chinese Communist Party last October, General Secretary Hu Jintao proposed to "gradually raise the bar for poverty alleviation criteria". The proposal was later written into the work schedule of the State Council Poverty Alleviation Office as its "top priority".

"In raising the standard, we need to consider both the reality on the ground and the [country's] actual financial capacity," a State Council official to the EO.

According to the National Bureau of Statistics (NBS), by the end of 2007, the 43.2 million Chinese in rural China living were living in poverty, among them 14.79 million were living below the critical poverty line.

As raising the poverty line would mean a sudden ballooning of official statistics of the population in poverty, it has long been considered a sensitive issue. However, some scholars said the concern was unnecessary, citing China's track record in lifting over 200 million people out of poverty through the last 30 years of reform and opening-up.

One scholar who wished to remain anonymous stressed that an increase in the size of poor population after adjusting the benchmark would not amount to a write-off past achievements.

Measuring Success in Poverty Alleviation
The Poverty Alleviate Office (PAO) was set up in 1986. Prior to that, though the size of China's population in poverty had dropped from 250 million to 150 million over a span of seven years, the reductions were not evenly distributed. Poverty remained severe in some remote areas, minority regions, and former revolutionary bases.

The PAO is a coordinating body under the State Council, made up of officials from various ministries such as the Ministry of Finance and the National Bureau of Statistics. In the recent round of massive government streamlining, half of the coordination offices were dissolved, though the PAO stayed intact.

PAO's international co-operation and non-government support team leader Wu Zhong said that assessing the size of poverty reduction was one of the many ways to determine poverty alleviation results.

In addition, he said the improvement of income levels and the living conditions of people in poverty was another assessment criterion.

He added that in the past, poverty alleviation focused on helping those lacking basic living capacity, but that now the goal had shifted to narrowing the gap between the rich and the poor. 

A reduction in poverty alone could not be interpreted as a success, said Wang Sangui, professor from the agriculture and rural development school under the Renmin University of China.

Wang believed macro-economic factors exerted more influence over the success of poverty alleviation work than providing direct aid.

He gave the example that even before the inception of PAO, the population in poverty had dropped drastically due to rural economy reform; and between 2004 and 2005, the size shrunk further due to rural preferential policies such as tax reduction.

He believed that poverty relief work would become more concrete in the future, whereby relief funds might be provided directly to poor individuals rather than poor areas.

In some poor counties or villages, he pointed out, those out of the poverty bracket benefited more from poverty relief policies than those in the bracket. Solving this problem should be the next priority task of poverty relief, he added.