Full Text of White Paper on Rural China's Poverty Reduction (I)

The Information Office of the State Council issued Monday, October 15, 2001, a white paper on poverty reduction in rural China. The following is the full text of the white paper entitled "The Development-oriented Poverty Reduction Program for Rural China":

China is the largest developing country in the world, its population making up about 22 percent of the earth's total. For quite a long time in the past, China was bedeviled by poverty, for various reasons. Since the founding of the People's Republic of China in 1949, and especially since the end of the 1970s, when China introduced the policy of reform and opening to the outside world, the Chinese Government, while devoting considerable efforts to all-round economic and social development, has implemented nationwide a large-scale program for development-oriented poverty relief in a planned and organized way. With the main objective of helping poverty-stricken people to solve the problem of food and clothing, this program has gone a long way toward alleviating poverty. Between 1978 and 2000, the number of poverty-stricken people without enough to eat and wear in the rural areas decreased from 250 million to 30 million, and the proportion of poverty- stricken people in the total rural population dropped from 30.7 percent to about three percent. The strategic objective set by the Chinese Government for enabling all poverty-stricken people in rural areas to have enough to eat and wear by the end of the 20th century has basically been realized.

The following is an introduction to China's development- oriented poverty relief for the rural areas:

I. The Course and Achievements of the Aid-the-Poor Program

Since the founding of New China, the Chinese Government has spared no effort to develop production and eliminate poverty. However, in the strict sense, the help-the-poor program was put forward and implemented on a large scale only after the initiation of the reform and opening-up. From 1978 to 2000, this program largely underwent the following three stages:

The First Stage: Structural Reform Promotes Poverty Relief (1978-1985)

In 1978, the poverty-stricken population numbered 250 million, making up 30.7 percent of the total rural population, according to the poverty standard designated by the Chinese Government. There were many causes giving rise to such a large number of poverty- stricken people, of which the main one was that the operation system in agriculture did not suit the needs of the development of the productive forces, so that peasants lacked the enthusiasm for production. In this way, reform of the system became the main way to alleviate poverty.

The reform that China started in 1978 was, first and foremost, a reform of the land management system, i.e., replacing the collective management system of the people's commune with the household contract responsibility system. This change of the land system kindled the peasants' real enthusiasm for labor, thus greatly liberating the productive forces and improving the land output. Meanwhile, many other reforms, such as gradually relaxing control over the prices of agricultural products and devoting major efforts to developing township enterprises, opened new ways for solving the problem of poverty in the rural areas. These reforms accelerated the development of the national economy, and conveyed benefits on the poverty-stricken people in three ways- raising the prices of agricultural products, transforming the agricultural production structure and orienting it toward higher added value, and employing rural laborers in non-agricultural sectors, thus enabling impoverished people to shake off poverty and become well-off and greatly alleviating poverty in the rural areas.

According to statistics, from 1978 to 1985 grain output per capita increased by 14 percent in the countryside, cotton by 73.9 percent, oil-bearing crops by 176.4 percent, and meat by 87.8 percent; the net income per peasant grew by 3.6 times; the number of poverty-stricken people with problems feeding and clothing themselves decreased from 250 million to 125 million, to shrink to 14.8 percent of the total population in the rural areas; and the number of poverty-stricken people went down by 17.86 million annually on average.

The Second Stage: Large-scale Development-oriented Poverty Relief Drive (1986-1993)

In the mid-1980s, the economy of the overwhelming majority of the rural areas in China, stimulated by the policy of reform and opening-up and relying on their own advantages, grew by leaps and bounds, but a small number of areas still lagged behind somewhat because of economic, social, historical, natural and geographical conditions. The disparity-economic, social and cultural- between the poverty-stricken areas and other areas, especially that between the poverty-stricken areas and the coastal advanced areas in the east, gradually widened. The uneven development in the Chinese countryside became marked. Quite a number of low-income people could not meet their basic needs for subsistence.

To further strengthen poverty relief, the Chinese Government has adopted a series of important measures since 1986, such as setting up special help-the-poor work units, allocating special funds, formulating special favorable policies, thoroughly reforming the traditional relief-type approach, and putting forward the development-oriented poverty reduction policy. Since then, the Chinese Government has set in motion a nationwide development-oriented poverty reduction drive in a big and planned way, and China's help-the-poor work has entered a new historical period. Thanks to the efforts made over the past eight years, the net income per peasant in the poverty-stricken counties to which the Chinese Government had attached special importance increased from 206 yuan in 1986 to 483.7 yuan in 1993; the number of the rural poor dropped from 125 million to 80 million, with an annual decrease of 6.4 million on average, and an average annual decrease rate of 6.2 percent; and the proportion of poverty-stricken people in the total rural population went down from 14.8 percent to 8.7 percent.

The Third Stage: Tackling Key Problems of Poverty Relief (1994- 2000)

Along with the deepening of the rural reform and the constant strengthening of development-oriented poverty relief, the number of the poverty-stricken people has shrunk year by year; great changes have taken place in the features of poverty; and the distribution of the poverty-stricken population shows obvious geographical characteristics, i.e. most poverty-stricken people live in central and western China, in the barren rocky mountain area of southwest China, the arid Loess Plateau in northwest China and the impoverished Qinling and Daba mountain areas (which suffer from rugged terrain, a shortage of arable land, poor transportation conditions and serious soil erosion), and the frigid Qinghai-Tibet Plateau. The main factors behind poverty are adverse natural conditions, weak infrastructure and backward social development.

Marked by the promulgation and implementation of the Seven-Year Priority Poverty Alleviation Program (a program designed to lift 80 million people out of absolute poverty in the period of seven years from 1994 to 2000) in March 1994, China's development- oriented poverty-relief work entered the stage of tackling the key problems. The Seven-Year Priority Poverty Alleviation Program clearly stipulated that China should concentrate human, material and financial resources, mobilize the forces of all walks of life in society and work hard to basically solve the problem of food and clothing of the rural needy by the end of 2000. It was the first action program for development-oriented poverty reduction with clear and definite objectives, targets, measures and a time limit.

For three years running (1997-1999), China solved the problem of food and clothing for eight million people a year-a record high in the 1990s. By the end of 2000, the basic objectives of the Seven-Year Priority Poverty Alleviation Program had been realized by and large.

Thanks to the arduous and unremitting efforts in the past more than two decades, China has made tremendous achievements in its drive to assist with the development of the poor areas.

-- The problem of food and clothing for more than 200 million rural poor has been solved. The number of poverty-stricken people in rural areas with problems obtaining sufficient food and clothing decreased from 250 million in 1978 to 30 million in 2000; and the impoverishment rate there decreased from 30.7 percent to about three percent. Of this, the number of poverty-stricken people in the impoverished counties to which the Chinese Government gave priority in its poverty alleviation efforts decreased from 58.58 million in 1994 to 17.1 million in 2000, involving mainly the destitute people living in areas with adverse natural conditions, a small number of people receiving social security assistance and some handicapped people.

-- Production and living conditions have remarkably improved. During the 15 years from 1986 to 2000, 99.15 million mu (one mu equals 1/15 ha) of basic farmland was constructed in poverty- stricken rural areas, and the problem of drinking water for more than 77.25 million people and more than 83.98 million draught animals were solved. By the end of 2000, 95.5 percent of the administrative villages in the poverty-stricken areas had electricity, 89 percent were accessible by road, 69 percent had postal service, and 67.7 percent could be reached by telephone.

-- Economic development has been speeded up remarkably. During the implementation of the Seven-Year Priority Poverty Alleviation Program, the agricultural added value of the poverty-stricken counties to which the Chinese Government gave priority in poverty alleviation went up by 54 percent, with an average annual growth rate of 7.5 percent; their industrial added value grew by 99.3 percent, with an average annual growth rate of 12.2 percent; their local financial revenue almost doubled, with an average annual growth rate of 12.9 percent; grain output rose by 12.3 percent, with an average annual growth rate of 1.9 percent; and the net income per peasant increased from 648 yuan to 1,337 yuan, with an average annual growth rate of 12.8 percent.

-- Social undertakings have developed quickly. The hitherto- rapid population growth in the poverty-stricken areas has been on the whole put under control, and the population's natural growth rate has decreased. The conditions for running schools have improved, and remarkable progress has been made in the work for basically popularizing nine-year compulsory education and that for basically eliminating illiteracy among the young and middle-aged. Of the 592 poverty-stricken counties to which the state gives priority in poverty relief, 318 have attained the aforementioned two objectives. Both vocational and adult education has progressed at seven-league strides, thus effectively improving the quality of workers. The town and township hospitals in most of the poor areas have been revamped or rebuilt. As a result, the shortage of doctors and medicines has been alleviated. A large number of practical agrotechniques have been popularized, and the level of scientific farming has improved remarkably. Ninety-five percent of administrative villages in poor areas can receive radio and TV programs; the cultural life of the people in these areas has improved; and their mental outlook has changed tremendously.

-- Some poverty-stricken areas which lie in vast, contiguous stretches have solved the problem of food and clothing as have the Yimeng, Jinggang and Dabie mountain areas, southwest Fujian and other old revolutionary base areas. Great changes have taken place in some remote mountain areas and areas inhabited by ethnic minority people. Dingxi Prefecture in Gansu Province and Xihaigu Prefecture in the Ningxia Hui Autonomous Region, once known as the "poorest places on earth," have vastly improved their infrastructure facilities and basic production conditions after many years of effort, and their poverty-stricken state has been greatly alleviated.

II. Policy Guarantee for the Aid-the-Poor Program

The poverty of China's rural areas is a problem that arose over long years in the past. Impoverished regions in China are characterized mainly by a large area and population sunk in poverty. Based on its understanding of the basic national conditions, especially the reality of the poverty-stricken areas and people, the Chinese Government has formulated a policy for development-oriented poverty alleviation that conforms to the reality in China. It sets mainly solving the problem of food and clothing of the rural poor as its basic objective and central task in this regard, starting from the most urgent problems, acting according to its capability, giving priority to key areas, and advancing step by step.

Defining the Standard of Poverty in Conformity with the National Conditions.

China is a developing country with a large population, a meager heritage and an underdeveloped economy, especially in the rural areas. In terms of the poverty-stricken areas in China, the underdevelopment is mainly reflected in the following: First, weak infrastructure. In the western region, where most of these areas are located, although the territory is over two-thirds of the nation's total, the proportions of railways, highways and civil aviation facilities are relatively low. Second, a rapidly growing population, and the low level of education, public health and other basic social services. In contrast to the backward economy, the poverty-stricken areas are usually noted for their rapidly growing populations. Due to the poor conditions for running schools and backward education facilities, a great number of school-age children are unable to go to school or obliged to discontinue their studies, and the illiteracy rate of the young and middle-aged is high. These areas are also characterized by a very low level of health care work. Third, poor agricultural production conditions, low revenue, and seriously inadequate public input. In 1986, the per-capita motive power of agricultural machinery in the counties on the state's priority poverty relief list accounted for only 50 percent of the national average. In 1993, the per-capita revenue in these counties was 60 yuan, only about 30 percent of the national average.

In accordance with the above-mentioned actual conditions, it is necessary to fix a realistic standard of poverty for China's help- the-poor work. The earliest standard was calculated by the relevant government departments in 1986, on the basis of the investigations of the consumption expenditures of 67,000 rural households, i.e., the standard of 206 yuan in per-capita net income in rural areas in 1985. It was equivalent to 300 yuan in 1990 and 625 yuan in 2000.

China's standard of poverty is the standard of the lowest expense to maintain one's basic subsistence. It can guarantee the basic living needs of the rural poor in China and, therefore, is an objective standard and also one that conforms to the reality in China.

Defining the Key Poverty-stricken Counties to Be Aided by the State

To use poverty relief funds in a unified way, and effectively aid the poor and needy, the Chinese Government has formulated the standard of the key poverty-stricken counties to be aided by the state , and identified a number of such counties.

The Chinese Government defined the standard of the key poverty- stricken counties to be aided for the first time in 1986 �� the counties with a net yearly income of less than 150 yuan per peasant in 1985. Subsequently, the standard had been readjusted in keeping with the economic development, especially the constant improvement of the economic conditions of the poverty-stricken areas. The readjusted standard in 1994 was less than 400 yuan in per-capita net income in 1992. So all those counties originally on the priority list where the per-capita net income had exceeded 700 yuan in 1992 were taken off the list. According to a typical calculation at the time , the problem of food and clothing of over 90 percent of the poverty-stricken people in the counties with the per-capita net income of more than 700 yuan had been basically solved.�� According to this standard, 592 counties in 27 provinces, autonomous regions, and municipalities directly under the Central Government were listed as the key poverty-stricken counties to be aided in the Seven-Year Priority Poverty Alleviation Program, covering over 72 percent of the rural poor across the country. The series of policies and measures for development-oriented poverty relief work adopted by the Central Government in subsequent years were mainly centered on solving the problem of food and clothing of the people in the counties on the state priority list.

The state has driven forward the solution of poverty in the rural poverty-stricken areas across the country through concentrated and effective aid to the impoverished counties. The state has explicitly demanded that all aid-the-poor funds must be used in the poverty-stricken counties. In 1996 , the Central Government further set the minimum proportion of supportive poverty relief funds ��30-50 percent�� for the provinces, autonomous regions and municipalities to guarantee the local supportive funds to be used in the key counties.

Putting the Stress on the Poverty-stricken Areas in the Central and Western Regions

It is an important strategic measure to favor the central and western regions in China's development-oriented assistance to the poverty-stricken. The regional features of China's economic development are very outstanding. The eastern coastal areas take the lead in economic development , taking full advantage of their own strengths. But the central and western regions are relatively backward. Therefore, China's rural poor are mostly concentrated in the central and western regions, especially in the western region , living in scattered areas in deserts, hills, mountains and plateaus. These regions are characterized by the largest number of poor people, and the deepest degree and most complicated structure of poverty. Of the 592 poverty-stricken counties named by the Chinese Government on its priority poverty relief list in 1994 , 82 percent are situated in the central and western regions.

The Chinese Government started to readjust the regional structure of the allocation of the state poverty relief funds in 1994: adjusting the relief credit funds of the Central Government in the coastal economically developed provinces to favor the worst provinces and autonomous regions in the central and western regions, and earmarking the new relief funds from the central budget only for poor areas in those provinces and regions. Keeping the overall situation in mind , the state has formulated preferential policies to actively promote a horizontal union between the eastern and western regions , and the aid-the-poor cooperation between similar departments of different institutions.

Over the past year, China has started to carry out the strategy of large-scale development of the western region to accelerate its development and narrow the gap in development between regions. The state has arranged preferential construction projects of infrastructural facilities, ecological environment and resource development in the western region, steadily increasing its investments and its financial transfer payments to the western region. All these have contributed a great deal to promoting the development of the western region and the solution of the food and clothing problem of the poverty-stricken there.

Increasing Capital Input for Poverty Reduction.

Over the past 20 years, with the augmentation of the state financial resources , the special aid-the-poor funds arranged by the Chinese Government have constantly increased. In 2000, such funds totaled 24.8 billion yuan, or 31 times as much as in 1980. The accumulative total of such funds have reached over 168 billion yuan , of which more than 80 billion yuan was from financial funds��including over 39 billion yuan of work-relief funds��, and 88 billion yuan from credit funds. Local governments have also increased the aid-the-poor funds according to the proportion of supportive funds set by the Central Government (30-50 percent since 1996).

The special aid-the-poor funds of the Chinese Government mainly include two categories�� financial and credit funds. The former includes funds to support the development of the underdeveloped areas, the new financial aid-the-poor funds, and work-relief funds. To tighten the control of the aid-the-poor funds and improve their utilization benefits, the State Council formulated the unified Measures on the Management of the State Poverty Relief Funds in 1997, explicitly providing for the objects and conditions of the aid, with special emphasis on the requirement that these funds should be used complementarily according to the overall objectives and requirements of the Seven-Year Priority Poverty Alleviation Program, so as to form a concerted effort enabling the funds to generate overall benefits. The aid-the-poor funds from various channels should be mainly put into the following fields: The financial funds are to be mainly used in the construction of basic farmland, small irrigation works and country roads , providing drinking water for people and livestock, technical training and the popularization of practical agrotechniques; the credit funds are to be used in assisting the poverty-stricken households in crop cultivation and aquiculture and poultry raising projects to increase their incomes of the same year. At the same time, the special relief departments at all levels are required to strengthen the inspection and supervision of the management and use of the funds. Auditing departments are required to strictly audit the use of the funds and promptly deal with and problem once found. These measures have played a key role in improving the utilization benefits of the aid-the-poor funds and in realizing the objective of basically solving the problem of food and clothing of the poor according to the required schedule. Formulating Preferential Policies to Support the Development of the Poverty-stricken Areas and Peasant Households

China's preferential policies for the development-oriented assistance to the poverty-stricken cover two aspects-helping the poor households to solve the problem of food and clothing, and supporting the economic development of the poor areas.

The preferential policies for helping the development of the poverty-stricken peasant households include: Waiving the mandatory state grain procurement quotas of households whose problem of food and clothing has not been solved; appropriately prolonging the utilization time limit of aid-the-poor loans and softening the terms of mortgage and guarantee, according to the actual situation��and reducing or remitting agricultural taxes and taxes on special farm produce according to the relevant provisions of the regulations on agricultural taxation.

The preferential policies to support the economic development of the poverty-stricken areas include: Gradually strengthening the financial transfer payments to poverty-stricken areas by the Central Government, and establishing a secondary transfer payment system by the relevant provinces, autonomous regions and municipalities to offer financial support to those areas; remitting income tax for three years for new enterprises in the poverty-stricken counties and enterprises established there by people from the developed areas; and, according to the principle of "he who benefits bears the expense," duly raising the standards of the construction and maintenance funds in the reservoir regions and earmarking these funds specially for solving the problem of food and clothing of the reservoir regions' relocated people.

Carrying Out the Responsibility System for Poverty Relief Work

To effectively implement the development-oriented aid-the-poor work, the Chinese Government established a Leading Group of the State Council for the Economic Development of Poverty-stricken Areas in June 1986 (renamed Leading Group of the State Council for Development-oriented Poverty Relief in 1993), to be responsible for the organization, direction, coordination, supervision and examination of the work in this regard. The governments of some provinces, autonomous regions, municipalities, prefectures (cities) and counties have also established corresponding organizations in charge of the local poverty reduction drive.

China practices the level-by-level responsibility system, with the provincial authority as the main player, in its administrative leadership of the poverty reduction work. The provinces, autonomous regions and municipalities, especially provinces and autonomous regions with large numbers of poverty-stricken areas ,have put development-oriented poverty relief high on their agendas, and formulated concrete local implementation plans in line with the state's poverty relief program. The principal leaders of the provinces, autonomous regions and municipalities are required to personally supervise the work and assume overall responsibility.

The Central Government issues the relief funds in one lump sum to the provinces , autonomous regions and municipalities at the beginning of every year , and accords the "four assignations"��of funds, powers, tasks and responsibilities��to the provinces,��autonomous regions and municipalities��. All the funds assigned to the provinces are to be arranged and used by the people's government at the provincial level, which shall organize the relevant departments to plan and implement the development projects.

Strengthening the Building of the Primary Organizations

The rural primary organizations in China have an important role to play in mobilizing and organizing the people to participate in the development-oriented poverty reduction work aimed at reshaping their own destiny. The Chinese Government has stressed improving the rural organizations at the village level in its poverty reduction drive, in order to enhance the degree of self- organization of the peasant households and guide them to bear an active part in the drive. In the past year, the Chinese Government has vigorously carried out the direct election system of villagers ' committees in rural areas, so that people who are really supported by the masses and are able to lead them to shake off poverty can be elected as village cadres according to the principle of openness , fairness and justice. At the same time, a policy has been strictly carried out , whereby village affairs ,such as revenue and expenditure , the distribution and use of the poverty relief funds , and the conclusion and alteration of contracts are left open to the villagers for their examination and supervision.

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