Poverty alleviation in Baise: An example for old revolutionary base areas

Finance converges the market

Poverty alleviation through industrial development cannot work without financial support. Compared with traditional agriculture, growing specialist crops such as fruits needs substantial initial investment and is capital intensive. Through a mortgage on the 550 mu (91 acres) of land he transferred, Liang Qingsong borrowed 2.5 million yuan (U.S. $365,500) in 2016, and expects to pay it back in 3 years.

Every impoverished household in Baise can borrow 50,000 yuan (U.S. $7,310) as poverty alleviation micro-loan with the interest payments subsidized by the government. But fearful of the risks posed by fluctuations in the market, many of them dare not invest the loans in industrial development.

Long Xiuzhen, head of an impoverished household in Fengji Village, Nanpo County in Jingxi, was faced with this very dilemma. The village is suitable for planting mulberry and raising silkworms, and some villagers had already achieved prosperity through this activity. Long has 6 mu (0.99 acre) of hilly land, on which she plants corn every year. Beset by poverty, the Long family lived crowded together in shabby old houses built of tile and wood. Although she admired the families involved in raising silkworms, she dared not try herself for fear of losing money.

Jingxi Xinshengjian Silk Company offered an opportunity to Long Xiuzhen. She bought shares in the company with a poverty alleviation micro-loan and now receives a dividend of 5,000 yuan (U.S. $737) each year. The company also provides technical guidance, guarantees the supply and quality of silkworms, and conducts unified purchase, which put Long’s worries to rest.

“40 kg silkworm cocoons can sell for more than 1,000 yuan (U.S. $146),” says Long. “This is many times the income generated by several mu of corn. I transferred all of my land to planting mulberries. My harvest of spring silkworms can sell for 5,000 yuan (U.S. $737); together with the dividend, I will certainly be rid of poverty this year.”

Regarding the low take-up of micro-loans, Baise is now trying out a new model of poverty alleviation financial support: The village has set up a registry of approved businesses and cooperatives. These are eligible for loans from commercial finance companies, with interest payments subsidized by the government. Impoverished families are encouraged to buy shares in the companies using poverty alleviation micro-loans, and they then receive annual dividends. Last year alone, 300,000 impoverished households benefited from this program.

Under the Baise model, the more impoverished households a company employs, the more financial support it will get. Jingxi Xinshengjian Silk Company employs 800 impoverished households, and receives funding of 40 million yuan (U.S. $5.85 million) in return. This policy encourages leading agricultural enterprises to join in the poverty alleviation effort.

“Poverty alleviation through industrial development is an existing solution,” says Li Wenxin. “Targeted poverty alleviation through industrial development is a new one. The Baise model aims to solve problems such as the effective disbursement of funds and the low capacity of impoverished households to withstand risk, as well as the financing difficulties faced by enterprises. It thereby enables impoverished households to enjoy the full benefits of industrial development.”

The benefit sharing mechanism among impoverished households, cooperatives and leading enterprises in Baise enables the characteristic industries involved to grow bigger and stronger. For example, the area planted with mango has reached 1.15 million mu (189,448 acres), with an annual output value of 4 billion yuan (U.S. $584.8 million), and it is reckoned that 68,000 impoverished households representing 252,300 people have been lifted out of poverty. Mango cultivation in Baise has therefore become a model poverty alleviation case of developing characteristic and competitive industries.