500 Million Chinese Lifted out of Poverty

Dr. Sen Gong, of the Development Research Centre of the State Council, wrote a five-section report, "Inequality in China: A Case Study", with Associate Professor Bingqi Li, from Australian National University, and Save the Children UK, helping to address the root causes of inequality in opportunity and outcomes, as China seeks to pave the way for sustainable economic growth and social development.

China's Impressive Progress in Reducing Poverty (Section 1)

Based on World Bank data, more than 500 million Chinese people have been lifted out of poverty over a period of 20 years – from 700 million in 1990 to about 130 million. However, these 130 million poor people account for about 10% of the population, most of them living in western China. Many more people are "almost poor", living just above the poverty line and are vulnerable to risks and shocks that could push them back under it once again.

Tackling widespread poverty or widening inequality was not considered to be a problem until the late 1990s. Poverty alleviation strategies focused on creating jobs rather than providing social benefits. Most government funds for poverty alleviation were directed to "work for relief" schemes to help improve physical infrastructure and develop the human capital of poor households, resulting in the household registration system (or hukou) being gradually loosened to allow rural laborers to find urban jobs.

The new rural Cooperative Medical Care System was introduced in 2002, with a similar scheme for urban residents without employment in 2006, and, for the poorest of populations, a Minimum Living Standard Guarantee System was introduced in 2003.

At the end of 2011, there were 6.24 hospital beds per 1,000 people in cities compared with 2.80 beds per 1,000 people in rural areas. It is even more difficult for a person from remote rural areas to reach a hospital. Apart from this, rural areas also suffer a shortage of qualified professionals who tend to migrate to cities, leaving much room for improvement.

In addition to free nine-year, compulsory education, the government made further social reforms in the housing system: a low rental scheme for people on welfare benefits, a subsidized social housing scheme offering rent rates that undercut market prices for people temporarily in need and a subsidized home ownership scheme for middle and lower-income groups.

More than 70 million people have benefited from the current social protection system, offering universal coverage of basic healthcare and basic pensions, a comprehensive social assistance system and a recent social pension system for older people without employment.

Chinese experience suggests that rapid economic growth, combined with an incremental extension of social protection system, has helped to lift vast numbers of people out of poverty, but also suggests that despite post-market redistribution improving the worst poverty, it is not as effective an approach towards poverty reduction as enabling people to find jobs. Therefore, China will face two problems in the new agenda of shared development: the chronic poverty problem and the emerging inequality issue.