Zero Poverty in China: Can We ExpectAnother Miracle by 2020?

China is a country often associated with the word “miracle”: Its economic growth has skyrocketed during the past 30 years, making China the second largest economy in the world today. This “miracle” has contributed to remarkable social progress, lifting 439 million people in China out of poverty between 1990 and 2011, contributing to approximately 48% of global poverty declines and leading to China’s achievement as the first developing country to have achieved the Millennium Development Goal (MDG) 1, “to Eradicate Extreme Poverty and Hunger”, ahead of schedule.

 Agi Veres, UNDP Deputy Assistant Administrator

Many of the “first” records set by China can be attributed to its ambitions to build a moderately well-off society in all aspects. As social-economic trends evolve, the focus is changing as to what challenges to address and how. The most recent top-level development blueprint – China’s 13th Five-Year Plan (FYP) – has aimed to consign poverty to history in China by 2020 through a “targeted poverty alleviation strategy”. The world is looking to China again for another miracle.

It appears that China is well on track to complete its “last mile” challenge of eliminating poverty. During the four years between 2013 and 2016, more than 10 million rural poor were lifted out of poverty each year, resulting in the accumulative total of 55.64 million people. Poverty rates also saw a decrease of 5.7% over this period, from 10.2% in 2012 to 4.5% in 2016. Taking into account this pace of development, China is making clear progress towards its zero poverty ambition.

The global community is showing much greater attention to China’s poverty alleviation successes, and an increasing eagerness to learn from China’s experiences in their constant pursuit of effective approaches and mechanisms to address poverty. China’s experience is unique, yet could serve as a useful reference point for many other developing countries that are attempting to eradicate poverty as soon as possible – one of the top priorities set by the Sustainable Development Goals (SDGs) is SDG1, eradication of poverty in all its forms by 2030. To facilitate this dialogue, the UNDP will share in this paper some key understandings of China’s successes in poverty reduction. This paper also presents an opportunity to briefly review our work as we navigate with China around obstacles and challenges in the path to poverty reduction. We hope our engagement has made meaningful contributions to China and can aspire many more to take action, now and in the future.

China’s Poverty Reduction Experience

As is widely acknowledged, China has created a unique menu of tools and approaches for poverty reduction that are deeply rooted in its social-political context. Many key words are applied to characterize the “Chinese way”, such as “trial and error”, “five-year planning”, “strong governance”, and “multi-stage gradual development”. These are all ingredients that came into view and have remained key to China’s “success recipe” over time. These go beyond policy specifics that require timely updates or reform to reflect changes in the root causes of poverty, capital or factor endowments. They are further elaborated in the following points.

First, China has been able to constantly adapt and innovate its poverty reduction strategies in response to broader social-economic and environmental changes. Over the past three decades, the key turning point for China’s approach is the departure from a relief-based assistance system towards the adoption of a broad-based and development-oriented poverty alleviation framework that attaches great importance to capacity building of the poor and promotion of self-reliance. This is manifested in the multitude of means proposed in the 13th Five-Year Plan, such as those aiming to enhance productive factors via an industry approach, enhancing human capital through education and training, and strengthening environment resilience via relocation/ecological conservation. All of these are instrumental for people living in poverty to get access to and accumulate the range of assets that serve as a stepping stone for long-term self-advancement.

Secondly, linked to the point above is the role of economic growth, and more importantly inclusive growth in driving China’s poverty reduction. One of the primary drivers for the shift in focus on how to tackle poverty relates to the recognition that economic growth is a prerequisite, but not a sufficient enabler, for poverty reduction in China. Many studies have confirmed the “trickle-down effects” of economic growth. This, however, has only been observed at the initial phase of poverty decline in China. As the economy grows, enlarging inequality has been found to associate negatively with poverty reduction, counteracting to a large degree the positive contributions of economic prosperity. This realization has motivated China to implement a holistic approach to promote inclusive growth, of which poverty reduction forms an embedded part.

Third, much of China’s poverty reduction efforts are highly institutionalized. The Chinese government has over the years demonstrated strong leadership and actively assumed state accountability in guiding poverty reduction, through setting up specialized organizations (e.g., the State Council’s Leading Group for Poverty Alleviation and Development) and formulating strategic polices that put into place finance, implementing mechanisms and accountability systems at all relevant levels. While it is still hotly debated whether such focused central governance is in practice an advisable way to address poverty, China’s experience has shown that guidance like this has allowed enough room for local innovation, and helped to leverage resources from a wider range of stakeholders including the public, private sector, and financial institutions. This thus forms the trinity model of poverty alleviation.

Fourth, increasing precision in targeting stands as another key element for China’s success. The poor are poor for different reasons and at different periods of time. This has been taken into account when targeting poverty alleviation efforts, as efforts are increasingly directed at smaller-scale units – from universal reduction to focuses on counties, villages and individual households – to facilitate differentiated programme and instruments designs. Precision is also required in poverty management, such as in monitoring and evaluation of the poor, fund distribution and use, and assessment of the poverty reduction outcomes.

Last but not least, financing plays a crucial role in supporting China’s poverty reduction efforts. Generally speaking, financing has transformed from an approach featuring one-way supply and free use to an approach featuring paid use. The fiscal funds earmarked for poverty alleviation from the central government have more than quadrupled, increasing from RMB 10 billion (approx. USD 1.4 billion) in 2001 to RMB 43 billion (approx. USD 6.4 billion) in 2014. After 2008 in particular, fiscal funds maintained an annual growth rate of more than 15%. Financing is also an effective lever for other types of funds used for poverty reduction activities, including industry funds, social funds and credit funds.

UNDP’s Poverty Reduction Work in China

An understanding of China’s poverty reduction practices has helped the UNDP to design tailor-made services and solutions to further its agenda. This work is guided by the UNDP’s mandate and overall objective, which is to strengthen capabilities and opportunities to reduce poverty and marginalization, focusing on the most vulnerable and excluded population groups, in ways that are sustainable from economic, social and environmental standpoints.

The UNDP aims to bring about transformational change to actualize real improvements in people’s lives. It promotes a comprehensive approach to tackle multidimensional poverty, inequality and exclusion, while enhancing knowledge, skills and production technologies to reduce risks, particularly environmental, and build resilient livelihoods.

The UNDP’s operation in China has gone through different stages as China makes progress in poverty reduction. While the UNDP used to work in China to help China build a firm production base by implementing programs in the primary sector, technology transfer and micro-finance, the UNDP increasingly works with China today to help share its knowledge and resources with other developing countries, facilitating mutual learning and growth. This is one of the fundamental principles underlying the South-South Cooperation (SSC). Programs are still formulated and conducted, but with additional purposes and intended for more advanced capacity building (e.g., entrepreneurship). Moreover, the UNDP attempts to provide innovative solutions and forward-looking perspectives to help China define, monitor and project poverty dynamics. In this session, a few recent examples of the UNDP China’s poverty reduction work will be introduced.

Poverty alleviation in ethnic minority regions for culture-based livelihoods development

THE UNDP has been supporting ethnic minority communities, focusing on women’s empowerment. Community Driven Development (CDD) has been applied to help the pilot communities establish and develop handicraft associations so as to improve their skills in business management and building market linkages. This approach is also intended to help raise public awareness of ethnic minority cultural heritage and enhance local people’s awareness of their own ethnic identity and pride in their traditional cultures. It also aims to enrich livelihood activities, facilitate communication and strengthen the sense of national solidarity between different ethnic groups.

From 2012 to 2016, in Yunnan alone, this UNDP project directly benefited 7,200 people in 6 pilot villages, of which 90% of beneficiaries were women. The initiative has been very successful and has generated many positive impacts, especially regarding handicrafts technique improvement, women’s empowerment and resonance of pride in ethnic culture. It has helped increase communities’ income and promoted poverty alleviation in Yunnan and Guizhou provinces as well as in Guangxi Zhuang Autonomous Region.

Financial inclusion for all

As indicated above, the UNDP ushered in the concept and methods of inclusive finance in the early 1990s, and incubated the first batch of microfinance institutions in 48 counties of 16 provinces throughout China. The UNDP drew on its expertise and global best practices on inclusive finance to help China set up mutual-help group pools, which group together members’ savings and serve as a loaning platform for members in need of financial support for production, healthcare, housing, and other support. Owing to the UNDP’s efforts over two decades, the establishment of the mutual-help groups and the introduction of inclusive finance into rural China have helped to fill the gap between urban and rural areas regarding financial service provision.

Today, big data and new technology also enable the UNDP to revitalize its traditional poverty alleviation strategies in the field. For instance, from 2014, the UNDP started exploring technological innovation and new models of inclusive finance as avenues for poverty alleviation in China. It started setting up capacity-building centres serving villages’ mutual-help groups. It aims to strengthen the decision-making mechanism, risk management, and created capital reserves to gain broader support. With the speedy development of digital finance, the UNDP is making efforts to bring in mobile payment, credit and other such new technological methods to make financial services for the poor more accessible and inclusive.

SDG localization – focusing on inequalities and poverty reduction

While the UNDP implements projects that target vulnerable groups, it has recently piloted programs that purport to strengthen governance capacity of administers at the local level. Building on thirty years of experience in China, the UNDP draws on its idiosyncratic approach to multi-dimensional poverty and grounds its approaches in the most up-to-date analysis of the Human Development Index, published annually in the Human Development Report.

Based on these, the UNDP has taken a comprehensive approach to the SDG localization and has developed a tailored and effective methodology for capacity building and project implementation to help local governments to achieve their poverty reduction targets, while also advancing the implementation of the SDGs at the local level.

The UNDP assists China’s SDGs localization with an emphasis on Goal 1, No Poverty, and on reducing inequalities. The UNDP can build the capacity of frontline poverty alleviation officials and practitioners by providing them with tailored training programmes which embed poverty alleviation in sustainable development. The UNDP aims to contribute to the design, implementation and monitoring of local poverty reduction programmes with advanced global expertise and methodology:

•  Advocacy, awareness raising and training of local officials on the SDGs and their connection to China’s poverty reduction efforts.

•  Assessment of development needs and interventions to achieve the SDGs and poverty targets at the local level.

•  Capacity building of local government officials, and other stakeholders to integrate sustainable development into planning and implementation.

•  Design and implementation of targeted poverty projects together with local governments, such as in Qinghai and other poverty-stricken areas.

•  Poverty monitoring and validation/certification of the achievement of targeted the SDGs.

Utilising innovative solutions to poverty monitoring

In the digital age, it is becoming easier to track development project results and evaluate their impact through the use of new technologies and innovative solutions. Embracing big data and new technologies and applying them to development work, the UNDP developed “the Living Standard Dimension of the Human Development Index” in 2016, with eight big data proxy indicators to measure poverty in 2,284 counties across the country. The Living Standards Index serves to support income-based measures of poverty and is expected to become a supplementary tool to assist policy makers and development practitioners.

Based on this index and on the data collected in 2,284 counties throughout China, the UNDP has developed an interactive visualization map, which allows users to zoom in on any province and visualize its performance across all eight indicators. Users can also pick one of the eight indicators, including access to piped water, access to sanitary toilets and mobile internet coverage, to view how these indicators fare across different counties and provinces within the country.

Poverty strategy post 2020

As the 13th Five-Year Plan passes mid-term implementation, questions surrounding poverty alleviation in China beyond 2020 have started to emerge. How should be poverty defined? What can be done to address it? To explore these questions, the UNDP is conducting a research project that looks at current poverty trends and looks to project future poverty status. With this piece, the UNDP strives to assist the Chinese government in formulation of the country’s national poverty strategy in the next Five-Year Plan.

Poverty Reduction in the Context of SSC

Since 2010, in response to the increasing global interest in learning from China’s development experiences, as well as China’s growing willingness to “go global”, the UNDP has engaged actively in China’s SSC work. The UNDP is especially well positioned to assist with China’s efforts in sharing its poverty reduction expertise, given its mandate for capacity-building, multi-disciplinary research capabilities, and on-the-ground experience in a wide variety of developing countries.

In this connection, a Memorandum of Understanding (MOU) among the State Council Leading Group Office for Poverty Alleviation and Development (LGOPAD), the Ministry of Commerce (MOFCOM) and UNDP was signed on the establishment of the International Poverty Reduction Centre in China (IPRCC), witnessed by the former Chinese vice premier and the UNDP former administrator during the International Poverty Conference held in Shanghai in 2004.

The IPRCC was founded to strengthen national and international capacities to design and implement policies and programs for poverty reduction. Since its inception in 2005, the IPRCC has accumulated a commendable track-record as a centre for poverty reduction training and policy dialogue. It also has been a key influencer in the facilitation of high level, ministerial and other international meetings on the topic of scaling up poverty reduction efforts.

The second phase of the UNDP’s support to the IPRCC, which was focused on achieving specific the MDGs, further enhanced the IPRCC’s capacity. The IPRCC and UNDP jointly established several important mechanisms for high-level dialogues and exchanges between China and the world on poverty reduction, such as the International Poverty Reduction Forum, the China-ASEAN Forum for Social Development and Poverty Reduction, and the Africa-China Poverty Reduction and Development Conference. These projects provided tailored training and collaboration opportunities for applied research and comparative study, helped foster networking, and facilitated professional exchanges.

By strengthening the IPRCC’s capacity, the mandate for disseminating China’s successful lessons and experiences in reducing poverty was met through a greater focus on expanding and institutionalizing modalities and mechanisms for the SSC. In this regard, the IPRCC has established partnerships with a wide range of substantive entities, including the UNDP/BDP and the IPC in Brazil.

Efforts do not stop there. Building on the outcomes of the first two phases, the third phase of the UNDP’s support to the IPRCC was established this May, fine-tuning the IPRCC’s position from generic experience sharing and exchange towards more specific problem-solving and action-based learning with other developing countries in Asia, Africa and Latin America. This is instrumental for telling the Chinese story more in-depth through participatory dialogue with all stakeholders, so as to sort out points that bear more relevance and arrange them further into joint field project designs in selected countries.

In addition to its support to the IPRCC, trilateral cooperation has become another core approach for the UNDP to assist SSC work in the field of poverty reduction. For example, the China-Cambodia-UNDP Trilateral Cooperation was launched to improve sustainable cassava production in Cambodia and increase revenue of cassava exports, thus creating job opportunities in the cassava sector. Meanwhile in Ghana and Zambia, China and the UNDP are working trilaterally to provide access to renewable energy solutions, especially in rural areas.

Conclusion

China has amazed the world with its remarkable progress in poverty reduction. This can be attributed to a variety of drivers over the past 30 years, including two prominent interacting factors, economic growth and effective governance. The UNDP has been able to witness, participate in and contribute to China’s poverty reduction efforts. Starting from programs that purport to build the fundamental production base and provide access to basic public services, the UNDP has grown to provide services that trigger innovative and forward-looking thoughts on methodology development and agenda-setting for poverty reduction. While looking inside China, the UNDP is working to help China go global in providing global goods and sharing on lessons learned from its own poverty reduction experiences.

This is particularly meaningful as China calls for stronger international cooperation to deliver the SDGs through the Belt and Road Initiative (BRI). The BRI, if properly implemented, could significantly boost regional prosperity through intensified connectivity via improved infrastructure, policies, finance, and people. Through increased multi-dimensional connectivity, there is great potential for creation of positive spill-over effects that can drive forward regional poverty alleviation strategies. Yet, this is not all that can be done. More importantly, the BRI could serve as a proactive platform for enhanced cooperation under the SSC framework, as well as acting as a driving engine for cross-cultural and cross-sectoral collaboration on Zero Poverty initiatives. The UNDP stands ready to facilitate this exchange, but also to engage deeply by bringing our own insights and expertise to the global poverty alleviation discussion.

Agi Veres is a UNDP Deputy Assistant Administrator.

Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn/Chinagate.cn.