Now to win the fight against indigence

By Ian Goldin | China Daily | Updated: 2019-03-14 08:47

China has made a remarkable achievement by lifting more people out of poverty more quickly than any other country

China has been responsible for 70 percent of the global reduction in extreme poverty over the past 40 years. This historical achievement is the result of a clearly defined and effectively organized campaign to reduce poverty. And the result has been unprecedented progress, with more people lifted out of poverty more quickly than has ever been achieved by any country in the history of humanity.

From the announcement of targeted economic reforms in 1978, over 700 million Chinese people have been lifted out of extreme poverty in 40 years.

This has been achieved through the concerted modernization of the economy. Agriculture has reduced in significance as a share of employment from over 75 percent 40 years ago to under 25 percent today, with manufacturing and then services overtaking agriculture to account for the largest share of employment. This has been associated with a process of urbanization and a commitment to universal education and health services as well as access to clean water and electricity. Whereas barely 20 percent of the population lived in urban areas 40 years ago, now over 55 percent of the population of 1.4 billion citizens are urban. Urban wealth has also increased more than threefold since 2000. And along with urbanization has come dramatic increases of 12 years in life expectancy to 77 years. And average incomes have increased over 40 times; when adjusted by purchasing power over 60 times.

The ambition of the Chinese government, as announced by President Xi Jinping at the Global Poverty Reduction Forum in 2015, is to eradicate extreme poverty in China by 2020. The next year is crucial to the achievement of this objective. And it requires great efforts to address the remaining pockets of poverty, drawing on the lessons of the extraordinary achievements so far.

The key to the Chinese success is a development-oriented leadership, and the building of a unified national commitment to shared goals. Policies developed over the past 40 years have been trialed and following careful evaluation scaled up nationwide. The combination of the depth and breadth of commitment to the objectives and the process of combining an understanding of best global and national practices with learning by doing and adapting to local circumstances is the most important lesson from China.

An early result from the initial institutional effort toward poverty reduction has been mass job creation, as private and public investments, and the construction of a network of transport and communication infrastructure created new jobs, and shifted workers toward the productive sectors of manufacturing and services. Today, over 80 percent of employment and around 60 percent of investment comes from the private sector.

This would not have been possible without the creation of an impressive network of educational, social, and research institutions, and widespread transport and communication links. With an increasingly far-reaching and solid structure in place, the Chinese government has created the springboard for poor citizens to lift themselves out of poverty, inspiring a sense of responsibility and allowing access to educational and technological resources.

The Chinese growth phenomenon, impressive as it is, does have its risks: particularly, the environmental sustainability of such rapid growth. This has resulted in a need to reduce the intensity of water and energy use, overcome pollution and curb the reliance on fossil fuels. These challenges are recognized by the government, and are part of the 2020 ambition to eliminate extreme poverty.

The inevitable consequence of rapid income growth from a very poor society that was one of the most egalitarian in the world is that some people have escaped poverty and got richer more rapidly than others. The increase in inequality that the country has been experiencing has a strong geographic dimension, as it reflects the divide between urban and rural areas, with urban areas enjoying more rapid increases in income than rural areas. Due to the hukou, China's household registration system of residency permits, rural-urban mobility has been curbed, which affects accessibility to healthcare, education and public services as well as to urban jobs by residents in rural areas. Inequality is likely to be reduced through the elimination of the remaining extreme poverty, but requires targeted interventions in isolated rural areas, the enforcement of minimum wage regulation, and a commitment to tackling corruption.

As China continues to focus on the elimination of extreme poverty domestically and further improves the lives of its citizens, its domestic achievements in poverty reduction increasingly will be strengthened by an emphasis on environmental sustainability and a focus on those at the bottom of the income distribution chain. The elimination of extreme poverty in China is an extraordinarily ambitious goal and it offers vital lessons for the rest of the world.

The author is professor of globalization and development at the University of Oxford and former vicepresident of the World Bank. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.