How Successful Was China’s Poverty Alleviation Drive?

Recent Features

Features | Economy | East Asia

How Successful Was China’s Poverty Alleviation Drive?

China eliminated extreme poverty, a monumental achievement. But the root causes of poverty persist.

How Successful Was China’s Poverty Alleviation Drive?

In this Sept. 10, 2020, file photo, a Yi woman watches new village houses decorated with colorful paintings which were built by the Chinese government for the ethnic minority members in Ganluo county, southwest China’s Sichuan province. Yi ethnic minority members were moved out of their mountain villages in China’s southwest and into the newly built town in an anti-poverty initiative.

Credit: AP Photo/Andy Wong

In February 2021, in the middle of the COVID-19 pandemic and the ensuing global economic downturn, President Xi Jinping declared that China had eliminated poverty in 2020. Poverty elimination was one of Xi’s most signature national policies. Since Xi took power in 2012, China lifted over 100 million members of its rural population out of poverty. Xi called this campaign a “complete victory,” a “miracle for humankind,” and China’s great contribution to the world. Chinese media credited the tremendous success to the leadership of the Chinese Communist Party (CCP), stating that such a success would be impossible without the “institutional advantage” of the Chinese party-state political system.

Poverty elimination was a mass mobilization campaign. Since Mao Zedong developed the Mass Line during the Yan’an era, mass mobilization has been the CCP’s key to success, ranging from its civil war victory to its management of the COVID-19 pandemic. Since the campaign started in 2015, the Chinese government has spent over $80 billion to end poverty. The government has relocated millions of households from remote rural regions to new villages more suitable for economic development; constructed new roads, houses, and other infrastructure projects; and offered direct cash transfers.

Beijing has dispatched over 775,000 cadres to survey all rural families to determine which households were living in poverty. Then, the government paired each poor household with a cadre to monitor the poverty elimination process. Many ordinary citizens also became involved in the campaign by donating money and goods to rural households and helping farmers to sell their products. The campaign even revived some old Maoist methods, such as sending medical workers to rural areas for checkups and treatments.

The poverty elimination campaign indeed improved the livelihood of numerous poor peasants in rural China. After building a new house paid for by government grants and no-interest loans, a farmer in a remote part of Yunnan province said, “Three years ago, we didn’t have these nice houses…. Now we have good places to live and health care.”

This tremendous living-standard improvement generates significant supports for the CCP’s regime legitimacy. A recent report from Harvard University’s Ash Center for Democratic Governance and Innovation found that the biggest boost in government satisfaction came in low-income and inland regions, where the poverty elimination campaign was active. As a result, many rural residents attributed their living standard improvement to Xi himself and strongly supported Xi’s removal of term limits in 2018. One peasant even said, “Twenty years of Xi is better than ten!”

Despite the tremendous achievements, the poverty elimination campaign failed to address the root cause of rural poverty: the underdeveloped rural human capital. Poor rural education has long plagued China. Research shows that 63 percent of rural students drop out before graduating from high school. Furthermore, the problem runs beyond schools; it includes malnutrition, health problems, and lack of early childhood development. Over half of rural babies in China face malnutrition and over half of rural children are developmentally stunted, with an IQ lower than 90, because of a lack of early childhood education. Forty percent of schoolchildren in rural China have intestinal worms, and over 30 percent of rural students have vision problems but do not have glasses. (For an in-depth discussion of rural poverty in China, read “Invisible China” by Scott Rozelle and Natalie Hell.)

This stunning failure in human capital development will have profoundly negative impacts on the future of China. Currently, about 70 percent of the Chinese labor force not only has no high school education but also lacks the potential for human capital development, as Rozelle and Hell note. These workers are only suitable for labor-intensive jobs, such as assembly line workers, and cannot be retrained for higher value-add jobs because of their lack of learning ability.

As China moves toward an innovation-driven economy and loses its comparative advantage for labor-intensive jobs to lower income countries, between 200 and 300 million working age Chinese might become structurally unemployable. They will get left behind by the rapidly developing Chinese economy and soon fall into poverty. High levels of structural unemployment will lead to social chaos. Jobless working-age people will become dissatisfied with the status quo and demand changes. Their anger will become a ticking bomb for the regime.

Facing this tremendous challenge, the Chinese government is not doing enough to address the rural human capital development problem. The poverty elimination campaign primarily focuses on lifting poor households above the poverty line of 4,000 renminbi ($619) per person per year and providing basic needs such as food, closing, medical services, education, and housing. The 2015 CCP Central Committee and State Council Decision to Achieve Victory in the Poverty Elimination Campaign identified job training, migration, social welfare expansion, and business support as primary means to lift the rural population out of poverty. The Decision also declared the expansion of central and local government spending on infrastructure constructions to expand networks of roads, electricity, and internet connections.

In contrast, the campaign did not focus on human capital development. Local cadres were not incentivized to improve rural education. Chinese local officials operate under the cadre responsibility system. This system assigns policy goals as targets, which local cadres need to achieve. Higher officials evaluate local cadre performance by measuring how well they met their targets. Local leaders always prefer accomplishing hard targets over soft targets because they weigh more in assessing their performances.

In the Rural Revitalization Plan (2018-2022), only one out of 22 targets for local cadres relates to education. In addition, the plan labels this target as “predictive” rather than “binding,” implying that it is a soft target. It explains why cadres focus almost exclusively on infrastructure construction and providing material goods, as these targets are measurable and binding hard targets. Meanwhile, human capital development is ignored.

The existing rural education policy creates a distortion because it focuses on quantity rather than quality. The 2015 Decision calls for expanding secondary education by enrolling all students who cannot attend academic high schools in newly constructed vocational high schools to receive professional job training. The government pledges to eliminate vocational school tuition and provide financial aid to poor students. The Chinese government reiterated this vocational school expansion policy in all Agricultural Number One Documents between 2015 and 2021.

According to Rozelle and Hell, 91 percent of students scored the same or worse in math exams after attending a vocational school for a year, showing that rural vocational school students are not learning at all. Most students are not even receiving proper job training in vocational high schools, as 56 percent of students spend their job training sessions working in low-level manufacturing. The low-quality education offered by vocational high schools will not develop China’s rural human capital. Despite receiving a high school diploma, these students will still face the future of structural unemployment.

This problem is not confined to vocational schools. China’s top policy design incentivizes local governments to maximize student enrollment in all levels of schooling. In the County Socioeconomic Statistic Statement, another document measuring the progress of the Rural Revitalization Plan, only two out of 24 targets are about education, and these two targets are the numbers of students in elementary and middle schools. Secondary school enrollment is also a measurement for education policy implementation. Rural cadres are incentivized to reach enrollment targets because they are measurable; cadres can demonstrate their competence by hitting these numerical targets quickly. However, they often disregard student outcomes, something that is harder to measure.

Deng Xiaoping defined the core value of socialism with Chinese characteristics as “productivity development to achieve common prosperity.” The poverty elimination campaign is a solid step toward the “common prosperity” ideal. The elimination of poverty symbolizes China’s achievement of a moderately prosperous society, a goal for generations of Chinese leaders, on the 100th anniversary of the Chinese Communist Party. However, how sustainable is this tremendous achievement?

Without real gains in rural human capital development, the elimination of poverty might be fragile and ephemeral. As opportunities close because of China’s slowing economic growth, finding low-skill jobs will become increasingly difficult. Without the capability to learn and upgrade their skill sets, rural peasant workers will soon find themselves stuck at the bottom rungs of the social ladder. In the worst-case scenario, they will find themselves falling back into poverty again once the campaign ends.