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Innovative poverty alleviation measures help Guangxi border regions flourish

GPIG,October 08, 2017 Adjust font size:

Located in south China and bordering Vietnam, the Guangxi Zhuang Autonomous Region administers 8 border counties, regions, and cities; among these, three are key national poverty alleviation counties, while five are suffering from stony desertification. In these areas, poverty alleviation remains a challenging task.

Border regions such as Dongxing and Chongzuo have innovatively adopted a “cross-border trade + ” poverty alleviation model, taking full advantage of favorable national policies for development pilot zones and financial-reform border zones, as well as a series of reforms easing customs regulations to increase trade convenience.

“Cross-border trade + mutual-help groups” model improves residents’ wellbeing

Located on the east bank of the boundary river Beilun, the Dongxing border trade zone is the China side of the Dongxing–Mong Cai economic zone: a free-trade area between Dongxing—the only Chinese city with both land and sea borders with ASEAN countries—and the city of Mong Cai, northern Vietnam’s largest border trade zone. Within this economic zone, people, goods, and vehicles of both sides can flow freely, and local residents walk across the border bridge every day to do business in bustling markets.

Making effective use of the 8,000-yuan (U.S. $1,183) daily duty-free limit, Dongxing came out with a “cross-border trade + mutual-help groups” poverty alleviation model, which Chen Jianlin, mayor of Dongxing, called the “1+n20+1” model: one Party branch leads several mutual-help groups with at least 20 members and 1 impoverished person, selling imported goods from authorized trade sites to processing enterprises in border regions, which in turn increases income of group members.

Zhang Xihui once lived in an impoverished household in Hezhou Village of Dongxing Town. Under the leadership of Han Xiangwu—the head of a mutual-help group—Zhang ran border trade and transportation businesses earning 19,386 yuan (U.S. $2,867) in the first four months of the year, equating to more than 4,800 yuan (U.S. $710) of monthly household income on average.

According to Chen, some impoverished people were trapped in passivity in the initial stages of the “1+n20+1” model; but, after seeing the positive results, they actively applied to join the groups.

Right now, the village has 20 such groups, whose 420 members represent 15.6% of the total village population. Of these 420 members, 67 are impoverished, accounting for 66% of the total impoverished population of the village. Xiang Jiancheng, the village Party secretary, introduced that since the establishment of mutual-help groups, each group has generated, on average, more than 38 million yuan (U.S. $5.62 million) in revenue annually with a profit of 720,000 yuan (U.S. $106,488). All impoverished members directly involved in the group’s daily operations, or who entrusted their loan to the group, lifted themselves from poverty with 36,000 yuan (U.S. $5,324) in annual income, or with a 7,600 yuan (U.S. $1,124) dividend a year, respectively.

The “cross-border trade + mutual-help groups” model provided employment to 111 impoverished people in Dongxing. Last year, it brought roughly 3,000 yuan (U.S. $444) of monthly income to impoverished people involved in jobs such as goods transportation and cargo handling. And the “cross-border trade + professional market” model, which promotes impoverished people’s involvement in border trade jobs, brought a monthly-income increase from less than 1,000 yuan (U.S. $148) to more than 3,000 yuan (U.S. $444).

By the end of 2016, the cities of Fangchenggang, Chongzuo, and Baise had established 552 such groups, whose membership of impoverished people had increased by 20%.

“Cross-border trade + financial services” model eliminates poverty

According to related regulations in Guangxi, each impoverished person taking part in cross-border trade can obtain a guaranteed and collateral-free loan of up to 100,000 yuan (U.S. $14,790) in under three years. With interest subsidized by local government, each impoverished household took out a 50,000-yuan (U.S. $7,395) loan, enabling them to get directly involved in a mutual-help group and to earn an annual income of 30,000–40,000 yuan (U.S. $4,437–5,916). For those who did not have the capacity to get directly involved, they could entrust the loan to one of the groups and receive an annual dividend of 8%, i.e. 4,000-yuan (U.S. $592) plus a monthly of 300 yuan (U.S. $44.37), which makes a total of 7,600 yuan (U.S. $1,124). With the dividends and free driving lessons paid for by the government, the group can purchase vehicles and distribute them to impoverished households for transportation business. Impoverished households could also entrust theirs to the group for operation.

He Yiyuan is an impoverished resident of Jiangna Village of Dongxing Town. With the poverty alleviation loan, he joined a mutual-help group, from which he receives a monthly salary of more than 4,400 yuan (U.S. $651); and with the dividend, he bought a car for transportation in and out of the port.

Seizing the opportunity created by the financial-reform border pilot zone, Dongxing guided financial institutions to innovate cross-border trade poverty alleviation products and services.

Previously, transactions between the Chinese yuan and the Vietnamese dong had been conducted using the U.S. dollar, which was inconvenient and occasionally would result in losses due to rate fluctuations. A new settlement policy enables live trade and the standardized management of transnational transactions.

In addition, with interest subsidized by local government, each group member can take out a 20,000-yuan (U.S. $2,958) credit extension loan while the group can obtain a 1-million-yuan (U.S. $147,900) credit loan from authorized financial institutions. Additionally, able impoverished people can get a guaranteed and collateral-free loan of up to 50,000 yuan (U.S. $7,395) in under three years.

Meanwhile, Dongxing also vigorously promoted cooperation between banks and enterprises. Providing a monthly-interest subsidy of 200,000 yuan (U.S. $29,580), Dongxing Jinghua Industrial Company borrowed 36 million yuan (U.S. $5.32 million) from Guilin Bank to support the groups in conducting border trade. They can use it either to run businesses, or to buy shares with tax exemptions and receive dividends.

With an annual income increase of more than 7,000 yuan (U.S. $1,035), the “cross-border + financial services” poverty alleviation model in Dongxing has benefited 442 impoverished people, and the mutual-help groups are growing stronger.

“Cross-border trade + processing” model extends industrial chains

On the busy assembly line in the plant of Dongxing Changying Food Company, workers skillfully sort and clean seafood, among other tasks.

According to Dan Yonghai, vice general manager of the company, Changying has partnerships with more than 10 local mutual-help groups. With 13% VAT deduction for raw materials purchased from these groups and 8,000-yuan (U.S. $1,183) daily duty-free limit, the processed products are selling to other parts of China as well as to Japan, South Korea, and to countries in the Middle East and Africa.

In order to attract more processing enterprises, Dongxing published a series of favorable policies on enterprise legalization, customs clearance and cost minimization. Dongxing established 57 mutual-help groups to contract with 10 pilot processing enterprises in purchasing and processing seafood, nuts, agricultural by-products, and so on. It solved problems of raw-material importation and provided employment for border residents, promoting not just the interactive development of cross-border trade and processing but also poverty alleviation in general.

So far, Chongzuo has introduced 22 processing enterprises; and in the first quarter of this year alone, the processing industry generated 721 million yuan (U.S. $107 million) in revenue, providing about 1,000 stable jobs to locals, driving the economic development of more than 10 nearby counties and towns, and bringing residents 1,000–3,000 yuan (U.S. $148–444) in wages.

By the end of 2016, Fangchenggang, Baise and Chongzuo had established 29 cross-border processing plants; and the introduced enterprises for border trade, processing, and transportation had provided about 10,000 jobs.

According to Ma Jixian, Deputy Director of the Commerce Department of Guangxi, in the next stage, the government will make concerted efforts to improve the policy system for cross-border processing; will pay adequate attention to the construction of border trade industrial parks to attract processing enterprises in Zhejiang, Fujian and other provinces; will actively strive for cooperation among joint inspection, financial institutions, and other departments to solve problems of port congestion and low efficiency in customs clearance; and will increase financing support for profitable mutual-help groups and related import projects.

Booming trade has brought economic benefit not only to China but also to the Vietnamese; meanwhile, enhanced trade has also contributed to regional peace and prosperity. Many hope that more favorable trade policies are on the way as the two countries seek closer ties.

The article was translated by Jin Ling and its original unabridged version was published in Chinese.