End the vicious circle of poverty

The State must provide services and opportunities to the poor to help them lead a life as fulfilling as their wealthy compatriots

China's poverty alleviation efforts have made great progress in the past decade. Thanks to the wide coverage of minimum income subsidies in cities, only 1 percent of urban residents are now living below the poverty line. At the same time, the rural population living in poverty has decreased by 67 million since 2000.

However, there is still much to be done as there are still 130 million people living below the poverty line, which was recently increased to about $1 per person per day, and there is a growing divide between the rich and poor that is causing social conflicts.

So the challenge is to improve the current poverty alleviation policies to fit the new economic conditions.

There are two key characteristics of China's economy today: fast growth and the growing social divides. The economy, if it maintains the current growth rate, will mean a per capita GDP of $15,000 in 2020, transforming the nation from a low-income country to a middle-income one. But despite this, the income gaps between rural and urban residents, different social classes and different regions are all widening.

China needs to pay more attention to comparative poverty, which is more serious than absolute poverty because it is a matter of social justice. This means a change in how we define and understand poverty.

Poverty is more than just a low income and weak consumption ability; it is also an inability to change one's situation for the better, as it also means poor education opportunities, inadequate healthcare, unstable employment and poor housing. In other words, poverty alleviation efforts should also focus on ways to increase opportunities and personal development as well as incomes.

To achieve this, the State must provide more services and opportunities for the poor, including better education, better healthcare, more job opportunities and wider social insurance. More investment is needed to create opportunities for both poor people and the impoverished regions, because in China the problem of poverty is related to place.

Therefore, in the coming years, the State should reform its poverty alleviation policy and expand its measures so that not only more people are lifted out of poverty, but also more people are prevented from falling into it. It should also combine its poverty alleviation strategy with a national income distribution and redistribution policy.

There are a great number of people living slightly above the poverty line, who cannot get any government help, although their conditions are not much better than those living below the poverty line. People living on the edge of the poverty line are at great risk of falling into poverty, because their opportunities and personal development options are the same as those living below the poverty line.

It is the responsibility of the State to prevent these people from falling into the ranks of the poverty-stricken population. The experience in China and in other countries shows that poverty is a vicious circle, as children living in poverty-stricken families are more likely to be poor and deprived as adults, and their own children are more likely to grow up poverty-stricken. This further curbs the liquidity between different classes in China, which is already very weak.

As the second largest and the most energetic economy in the world, China is fully able to help all its children escape this vicious circle; all it needs to do is to invest more for their future. The free lunch for a limited number of children in poverty-stricken areas is a step in the right direction, but more needs to be done to raise the quality of compulsory education, to increase pre-school education resources and to provide the children, not officials, with a safe ride to school.

With the widening income gap, the State has no choice; it must ensure that income distribution is fairer. A series of policies concerning distribution and redistribution are expected to come out in the near future, which will help to address this issue.

Last but not least, government support is needed to ensure the poverty-stricken population has a voice and can participate in social affairs. After all, they are also citizens and have the same right to a fulfilling life as their rich compatriots.

The author is a professor of economics at Beijing Normal University.

(China Daily 12/10/2011 page5)