Economy

Share the wealth

Xi Jinping’s latest rallying cry calls for an end to poverty in China

Ice-boy-w

‘Ice boy’ photo melted the heart of tens of millions of Chinese

When Wang Fuman set off for school on the morning of January 8 in rural Yunnan, he had no idea he was about to become an internet sensation: a symbol of grit, the Chinese spirit and the country’s enduring problems with poverty.

It was minus 9 degrees celcius that morning and by the time he had completed his two-hour walk to school, his tufty hair was coated in frost.

His teacher took a photo of the poorly clad boy – his hands and cheeks chapped by the cold – and sent it to friends on WeChat.

By the end of the week his image had gone viral, earning him the name “ice boy” (see photo).

“How can it be that even his school has no heating?” asked one.

“What is the government doing to help?” was a common question.

China has 30 million people still living in extreme poverty and the goal is to make sure all of them are lifted out of that state by 2021 – the hundred year anniversary of the Communist Party’s founding.

Chinese leader Xi Jinping has listed poverty as one of the “three tough battles” the country must fight, along with pollution and financial risk.

In his News Year’s address Xi made a “solemn promise” that the government would meet its target.

“This will be the first time in our long history that extreme poverty has been eliminated. Let’s work together to accomplish this great task for the Chinese nation and for all of mankind,” he said.

But just how easy will it be?

After all 30 million is equivalent to half the population of Britain.

In fact, the centenary goal of making China an “all round moderately prosperous society” has been in place since Hu Jintao’s time.

(Note there is a second centenary goal pegged to 2049 – the 100th anniversary of the Party’s coming to power – whereby China must become “a strong, harmonious, modern socialist country”).

Xi has doubled down on the importance of both goals since coming to power. In the case of the first he has made it explicitly about GDP growth and ending poverty.

This year is also the fortieth anniversary of Deng Xiaoping’s economic reforms. As the Global Times said of poverty elimination this week: “It’s a task that is both achievable and indeed obligatory considering the country’s enormous economic growth in the past 40 years.”

So, let’s look at the numbers.

China defines extreme poverty as a person with an income of less than Rmb3,300 ($516) a year. That may look like less than the World Bank’s definition of less than $1.90 a day, but it is actually higher when you take into account that goods in China are cheaper.

Since 1978, some 700 million Chinese people have moved out of poverty, an achievement that both the United Nations and the World Bank have praised as historic. Indeed, according to the UN, China is responsible for at least 70% of global poverty reduction over the past four decades.

And statistically speaking it can meet its 2021 target with ease because about 12 million Chinese a year move out of poverty.

Yet China is now faced with the “last mile” problem – the 30 million people that remain are the ones whose situation has yet to be improved by government initiatives. They are often old, sick, disabled or living in remote, undeveloped areas. Pulling them out of poverty will take more creativity and more investment per capita.

In many cases corruption is also a problem. Earlier this month the National Audit Office said 6,000 officials had been charged with misusing poverty relief funds amounting to Rmb6 billion in the last five years.

(According to China National Radio, donations that are worth Rmb300,000 have been sent to the Ice Boy but his family was only given Rmb8,000. The rest has been given to less fortunate pupils in the region, a local authority said.)

Since Xi came to power in 2012 external checks on the use and distribution of such funds have become more rigorous (just like environment checks, see WiC381).

In the past local officials have siphoned off low income supplements into fake bank accounts or redirected them to relatives who don’t qualify. In one 2007 study only 10% of those receiving so-called “dibao” payment actually qualified. In many villages the village head decides who gets the supplement leaving the selection process open to abuse.

To counter that, outside investigators now carry out checks and post the names of those who should be helped on village notice boards – so the public can hold local officials to account. In addition, all village leaders have had to sign documents pledging to carry out the government’s anti-poverty plans honestly.

Some of the plans are a bit wacky to say the least. In one recent example – highlighted by Xinhua – an impoverished rural collective in Inner Mongolia was taught how to raise peacocks as a tourist attraction. It took a few years for the scheme to take off because the tropical birds didn’t fare well in the harsh northern climate. But with successive generations they acclimatised and now the villagers make a decent living selling the feathers and eggs and allowing visitors to take pictures.

However, for more out of the way communities such programmes will have little impact. In those cases the government has decided relocation is the only solution. Some 10 million people are slated to move to places with better infrastructure, sanitation and work opportunities in the current Five-Year Plan period (ending in 2020).

Yet this in turn raises ethical questions – do the people want to move? Is the government only moving them to hit a politically expeditious target?

There are other issues too. China’s big anti–poverty plan does nothing to address the issue of the urban poor – a problem which is growing as more people move into cities; and even if it lifts all its citizens above its (somewhat arbitrarily set) poverty line many will still be very poor.

Ice Boy Wang for example doesn’t actually qualify as extremely poor because his father, a migrant worker in Kunming, earns Rmb3,300 a month. But Wang lives in a mud hut with no plumbing or heating and has only his ailing grandmother to care for him and his sister.

That said, the Party will still make hay out of the achievement when the time comes. In his work report to the 19th Party Congress Xi said China now had a model that other “developing countries” might want to follow. Indeed, this week the Global Times urged India and Pakistan to learn from China’s “rich experience in eradicating poverty”.

“China’s historic achievement in poverty alleviation shows the great leadership of the Party,” the People’s Daily proclaimed last year.


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.