Is Poverty about a Money Problem?

It is a universal truth that there is no single root cause of poverty. A lack of money is one of the main causes. The fall of the traditional industry is another big reason. Indeed, understanding where poverty comes from is a crucial part of the process of devising and implementing effective solutions against poverty in China.

Just as a guiding paper jointly issued by the People's Bank of China (PBC) and other organizations illustrated, finance-driven policy focusing on industrial development could change the face of poverty, as chinanews.com reported.

Rural people living in Lankao County, in central China's Henan Province, gained benefits from the policy while combining it with the local stringed instrument industry.

"In the past, we farmers or farm-workers here had to earn income from conventional farming with a maximum of 2,000 yuan (U.S. $304) annually. But now, our earnings can reach as high as over 4,000 yuan (U.S. $608) per month, thanks to the rejuvenation and upgrade of the stringed instrument industry as well as the backup effort of local banks," said Liu Lu, whose family enjoyed the fruits of the pro-poor growth.

The General-manager from a local instrument company revealed their products accounts for 25 percent of the national stringed instrument market, ranging from the Zither to the Erhu. Up to now, their business made good profit with an annual turnover of 70 million yuan (U.S. $10.6 million).

In fact, the year of 2014 witnessed a great change for locals as its government and banks agreed to invest in the industry. The bank provided micro loans to business owners and entrepreneurs across the County before they applied for business loans. A reputable stringed instrument industry, together with four small and medium-sized enterprises, obtained an 18 million yuan (U.S. $2.7 million) loan at a simple annual interest rate less than 5 percent.

The microloan-driven poverty reduction policy, which features a relatively safe and convenient procedure and an unsecured loan, are warmly received among locals. According to the Deputy Director of Lankao County, Yang Zhihai, the policy not only pushes local industry forward but also promotes employment opportunities and start-ups. Currently, the policy provides employment to more than 1,500 skilled hands while lifting its neighboring village of 300 underprivileged households out of poverty.

Statistics released by a local official website revealed that the total poor population in the County was reduced to 79,400 as their per capita income increased to 7,545 yuan (U.S. $1,147) by the end of 2014. In addition, their county's gross domestic product in 2014 amounted to 21.395 billion (U.S. $3.252 billion), nearly 1.7 times as much as that of 2010.