Poverty in China
[6][7][8] The Chinese definition of extreme poverty is more stringent than that of the World Bank: earning less than $2.30 a day at purchasing power parity (PPP).
This can be attributed to a combination of a rapidly expanding labour market, driven by a protracted period of economic growth, and a series of government transfers such as an urban subsidy, and the introduction of a rural pension.
[4] At the end of 2018, the number of people living below China's national poverty line of ¥2,300 (CNY) per year (in 2010 constant prices) was 16.6 million, equal to 1.7% of the population at the time.
[19] Since Deng Xiaoping began instituting market reforms in the late 1970s, China has been among the most rapidly growing economies in the world, regularly exceeding 10 percent GDP growth annually from 1978 through 2010.
Starting from the pre-reform situation, some increase in income inequality was inevitable, as favored coastal urban locations benefited from the opening policy, and as the small stock of educated people found new opportunities.
Recent government measures to reduce disparities include relaxation of the hukou system, abolition of the agricultural tax, and increased central transfers to fund health and education in rural areas.
China's lifting of more than 800 million people out of extreme poverty since the late 1970s has been the largest global reduction in inequality in modern history.
[27] The opening up measures have been accompanied by improvements in the investment climate, particularly in cities in the coastal areas, where the private sector now accounts for 90% or more of manufacturing assets and production.
The shift to the household responsibility system propelled a large increase in agricultural output, and poverty was cut in half over the short period from 1981 to 1987.
[31][32] On 6 March 2020, Xi Jinping, the General Secretary of the Chinese Communist Party, announced that by 2020, China will achieve all poverty alleviation in rural areas.
The Nobel Prize-winning economist Sir Arthur Lewis noted that "development must be inegalitarian because it does not start in every part of the economy at the same time" in 1954.
As an underdeveloped country, China began its reform with relatively few highly educated people, and with a small minority of the population (20%) living in cities, where labor productivity was about twice the level as in the countryside.
The large productivity and wage gap between cities and countryside also drives a high rate of rural-urban migration, which has left millions of children traumatized due to parents who have left them to be raised by other family members, as the Chinese government does not allow parents who move to urban areas to take their children with them.
[38] Lewis pointed out that, starting from a situation of 80% rural, the initial shift of some from low-productivity agriculture to high productivity urban employment is disequalizing.
This surplus of rural laborers and mass internal migration will no doubt pose a major threat to the country's political stability and economic growth.
Their inabilities to find jobs compounded by the rising costs of living in the cities have made many people fall below the poverty line.
SOEs’ roles were more than employers, they are also responsible for the provision of welfare benefits, like retirement pensions, incentives for medical care, housing and direct subsidies and the like to its employees, as these burdens greatly increased production costs.
[50] This restriction is based on the citizen's registration under the hukou system, which states if the individual was born in an agricultural (rural) or non-agricultural (urban) area.
[52] More fundamental and radical measures such as directly redistributive taxation and social security systems or land tenure and agricultural produce price reforms are not mentioned here, however: presumably because they are not considered prudent.
[54] This lack of public funding meant that children of rural families were forced to drop out of school, thus losing the opportunity to further their studies and following the paths of their parents to become low skilled workers with few chances of advancements.
This rise is good for the incumbent workers, but they are relatively high up in China's income distribution, so that the wage increases raise inequality.
Third, recent studies focusing on migrants have shown that it is difficult for them to bring their families to the city, put their children in school, and obtain healthcare.
[60] Rural, or “collectively owned land”, is leased by the state for periods of 30 years, and is theoretically reserved for agricultural purposes, housing and services for farmers.
The fact that many peasants cannot earn a decent living as farmers is a signal that their labor is more useful in urban employment, hence the hundreds of millions of people who have migrated.
In part, the sheer size of the country explains this degree of decentralization, but the structure of government and some unusual expenditure assignments also give rise to this pattern of spending.
[62] These disparities in aggregate spending levels also show up in functional categories such as health and education where variation among counties and among provinces is large.
China's highly decentralized fiscal system results in: local government in many locations not having adequate resources to fund basic social services.
The average hospital visit in China in 2018 is paid 35% out-of-pocket by the patient,[66] compared to 25% in Mexico, 17% in Australia, 10% in Turkey and the United States, and lower amounts in most developed countries.
[68] In terms of individual factors, women are less likely complete their primary education, have worse health and nutrition, and more likely to enduring chronic diseases, hospitalization and low income.
[70] On the other hand, Chinese traditional belief on family see divorce as negative, and often push mothers to sacrifice themselves to fulfill their children.
