Explained: China’s poverty alleviation goal still a myth

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BEIJING: Chinese President Xi Jinping in December 2020, claimed that China had met its poverty alleviation goals. He touted this achievement as a significant victory for China, and one that would impress the world. China claims that almost 100 million people have been lifted out of poverty in the last 8 years. Despite China's lofty claims, millions of Chinese poor still struggle with abysmal living standards and lack of employment. China's claims of poverty alleviation are based on a rise in its per capita income to $8130 in 2020. However, poverty is not an absolute concept and rather a comparative one.

China's middle class (households that earn more than $10,000 annually) comprise only 6% of China’s population while nearly half of China's population earns less than $1000 per household a year. As per a research paper titled 'ncome inequality is growing fast in China and making it look more like the US' published by the London School of Economics, the share of national income earned by the top 10 percent in China has risen drastically from 27 percent in 1978 to a whopping 41 percent in 2015. On the other hand, the share of national income earned by the bottom 50 percent of China’s population has dropped from 27 percent in 1978 to 15 percent in 2015. However, the income of the remaining 40 percent has remained stable during the period.

China's massive land area and the heavily dense population is one of the contributing factors in the rise in disparity in the income of the people living in various regions of the country and thereby forcing poverty on certain populations. Transporting goods and capital into China's interior has remained difficult and extremely costly till date. China’s coastal regions and northern-plains are the only areas that have easy access to foreign trade and its benefits. As a result, these areas have become increasingly wealthy as compared to China's rural interior regions. According to reports, China’s GINI coefficient (a statistical tool used to measure income distribution) in 2012 was 0.474. This meant that China's wealth distribution was even worse than countries like Peru and the Philippines.

Data collected via the 2011 China Statistical Yearbook has shown that rural people residing in the coastal region of Fujian have an average income that is 20-30 percent higher than the national average. On the contrary, the rural per capita income in the north-west province of Xinjiang is 20-30 percent below the national average. The per capita disposable income of urban residents in the coastal province of Zhejiang is 40-50 percent higher than the national average, while the average disposable income of urban residents in the western province of Tibet is 20-30 percent lower than the national average. The per capita disposable income of the coastal province of Guangdong is 50-100 percent higher than the national average. On the contrary, the average disposable income of a person in the western province of Qinghai is 30-40 percent lower than the national average. In the coastal city of Shanghai, annual per capita disposable income in 2019 stood at $10,052, while people residing 2,000 kilometers west of Shanghai in Gansu had a per capita disposable income of just $2,771.

Besides poverty, the Chinese rural migrant workers also suffer from other hardships such as a high risk of injury and lesser civil rights. In 2019, there were over 290 million rural migrant workers in China and this amounted to 37.5 percent of the workforce. Most of these migrant workers are considered to be employed in ‘vulnerable work’ in the manufacturing and construction sectors. Such employment is characterised by “inadequate earnings, low productivity and difficult conditions of work.” In China, many migrant workers do not have access to any government schemes, jobs, and benefits due to the prevalence of China’s hukou system. The hukou system is a form of household registration system that categorises people in China as either rural or urban and restricts them to a certain geographical area. Domestic travel within this system is highly controlled and if residents were to move out of their designated area, they would lose access to jobs, public services, education, healthcare, or food provided by the government.

If a rural farmer from the west decides to travel east towards China’s richer coastal regions, they would ultimately share the same status as that of an illegal immigrant in their own country. China's hukou system greatly benefits urban dwellers and is disadvantageous to rural dwellers. Under this system, urban residents can enjoy a wide range of socio-economic benefits while rural communities are marginalised. In China, the hukou system impedes social mobility and creates an artificial caste system that is used to govern the poor people of China. Due to the hukou system, migrant workers tend to evade documentation while migrating to urban areas for employment. Such undocumented workers do not count towards municipal economic statistics and thereby cause apprehensions over reliability of the national statistics as well.

Another reason for China's growing economic disparity is due to highly uneven investment as well as internal tariff barriers to trade. Due to the sheer size of the country, the Communist Party of China delegated policy making (including economic policy) to regional and local Officials. These officials impose tariffs and roadblocks on trade to the point that it becomes easier to trade with foreign states than with other parts of China. This further causes disintegration of the rural poor from the urban rich.

Xi Jinping recently announced that China had defeated ‘poverty’ but it does not seem to be the case. There still exists large income inequality in China with large amounts of wealth being concentrated in the hands of a few while the majority remain marginalised. Even though China claims to have eradicated poverty, the majority of its citizens are still much poorer than it seems. Despite many reforms, the hukou system remains fundamentally intact and this has continued to cause disparities among China's agricultural and industrial sectors. There also exists a disparity between China’s coastal regions and the country’s interior. China’s underdeveloped interior continues to be cut off from the benefits of foreign trade and is therefore economically way behind the much prosperous coastal regions. While China has certainly made significant strides, it has come nowhere close to eradicating poverty and improving the living standards of the poor in its society.