October 18, 2016

China creates fund and mobilizes to eliminate extreme poverty by 2020

China established an extreme poverty relief fund with an initial 12.2 billion yuan (US$1.81 billion) in capital from 51 state-owned enterprises, including the State Development and Investment Corp and the State Grid. That sum will eventually grow as as much as 100 billion yuan (US$14.8 billion), according to a statement from the State Council's State-owned Assets Supervision and Administration Commission.

China pledged to lift 10 million people out of poverty every year from 2016 On Monday, October 17, in a white paper on China's progress in poverty reduction and human rights issued by China's State Council Information Office. The aim is to eradicate extreme poverty by 2020.

The goal is to ensure every Chinese earns more than 4,000 yuan a year (US$594/ year of US$1.61 per day) - the State-owned assets commission has required that the initial 12 billion yuan is invested by 2018, According to an internal report acquired by China Daily.

In June 2014, the Ministry of Finance, SDIC and China Tobacco Established a poverty alleviation fund of 2.8 billion yuan, the first of its kind in China. Liu, whose company also runs that fund, said the investment strategy will "be almost the same ", With the aim to maximize the business impact.

This year, China has allocated more than 100 billion yuan of government-controlled funds, a record amount, to help lift more people out of poverty, according to Su Guoxia, a spokeswoman for the leading group on poverty alleviation.

Funding from the central budget was increased to 66.7 billion yuan, up by 43.4 percent on last year, while provincial budgets exceeded a total of 40 billion yuan, an increase of more than 50 percent.

On Monday, China's State Council Information Service issued a white paper on China's progress in poverty reduction and human rights.

China still had 56 million people living in extreme poverty, roughly the same size as the population of South Africa.

According to World Bank statistics, over the past several decades China has accounted for more than 70 per cent of reductions in global poverty. The poverty-stricken population in China has plunged from 770 million people in 1978 — the year before economic reforms began — to 55.8 million in 2015. And the Human Development Index (HDI) for China has improved by 43 per cent between 1990 and 2013, compared to an improvement of 17.6 per cent globally.

By the early 2000s, the overall poverty rate in China had shrunk dramatically.

But China’s poverty entered a new phase marked by widening gaps between cities and rural areas, and between coastal industrial regions and the interior hinterlands. The relationship between economic growth and poverty alleviation was more complicated and less assured than once thought.

It appeared that economic growth driven by industrialisation was not a panacea. Economist Theodore Schultz argued that developing a modern agricultural sector was equally as important. After all, the majority of poor people live in the countryside and earn their livelihood through agriculture. Schultz argued that the root cause of poverty is not a shortage of physical capital but a shortage of ‘human capital’, such as education and healthcare.

From the early 2000s onward, the Chinese government began to focus on addressing agriculture, the state of rural areas and the status of farmers. In 2006 they eliminated agricultural taxes, which had existed for more than 2000 years. The government also made great efforts to improve social services in rural areas, providing improved education for rural students and new cooperative medical care, as well as minimum living-standard guarantees for more than 53 million rural people.

Since 2011 the growth rate in per capita net income and per capita GDP for rural residents has been higher than the national average. In 2015 alone, the impoverished population in rural areas declined by 14.42 million people, and the incidence of poverty fell to 5.7 per cent from 7.2 per cent in the previous year.

China's experience in poverty alleviation entails:

Continuous reform and innovation; sustained and steady economic growth with policies favoring poor regions and poor people.

Integrating poverty alleviation into the national development strategy, and organizing large-scale poverty alleviation programs with targeted programs for women, children, disabled people and ethnic minorities;

Adopting a development-oriented poverty alleviation approach that focuses on development as the fundamental way to get out of poverty, and building poor people's capacity to help themselves.

Pursuing a strategy of balanced urban and rural economic-social development, getting industry to support agriculture and cities to support rural areas.
Developing infrastructure, including roads, water and sanitation, electrification, natural gas supply and housing.

Mobilizing all resources for poverty reduction, including both public and private sectors.

Integrating general and special favorable policies, development-oriented poverty alleviation and social safety nets.

In the next five years, China, as the biggest developing country in the world, is entering a critical stage of its efforts to build a well-off society, and facing a number of new challenges in poverty reduction.

By the end of 2015, 55.75 million Chinese people lived in poverty, equivalent to the population of a medium-sized country. The nation still has 14 poor regions, 832 poor counties, and 128,000 poor villages. It will be a hard task to help The residual poor, as they live in deep poverty and lack self-development capacity. And it will become increasingly difficult and costly. But there is no time to loose. To eliminate extreme poverty by 2020, 10 million people have to be lifted out of Poverty each year for the next four years. Their vulnerability means that they are very likely to fall back into poverty due to disaster, illness, and education and housing costs.

China also faces many new problems, such as economic slowdown and industrial restructuring, inadequate targeting mechanism, poorly defined responsibilities, inefficient allocation and use of resources, and lack of effective policy coordination among poverty alleviation, rural minimum living standards guarantee, new rural cooperative medical Care, medical assistance, dilapidated housing rehabilitation and education assistance, and lack of adaptation to local conditions and specific guidance.

China will pursue targeted poverty alleviation policies and strive to reduce poverty through development of industries, labor migration, relocation, and minimum living standards guarantee scheme. The government will increase fiscal spending and financial support, strengthen land policy, mobilize a private environment, and create a favorable environment. It also focuses on resolving alleviation responsibilities of governments at all levels, developing a rigorous monitoring and evaluation system, and establishing an exit mechanism for poor counties.

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