1. Poverty in Today’s China

1. Poverty Status, Anti-poverty Strategies in China and IPRCC’s Role in Poverty Monitoring and Impact EvaluationZhang LeiManaging Director, International Poverty Reduction Center in China April 10, 2006

2. 1. Poverty in Today’s China • China is a country typical in its disparity between urban and rural areas. Huge gaps range from economic sectors to technology, education, culture, custom and consumption structure. So it’s hardly possible giving a uniform definition to poverty and poor population. Considering the existing gap between the urban and rural, we think the poor shall consist of the following three groups: rural poor, urban poor and migrant laborers in urban areas.

3. 1.1 Rural Poor • 1.1.1 Changes on Magnitude Measured by the criteria adopted in China for the absolute poor: from 1978 to 2005, the poor below subsistence line reduced from 250 million to 32 million, its proportion in total rurals from 30.7% to 3.4%. In the breakdown: • From 1978 to 1985, the poor reduced from 250 million to 125 million, annually 17.86 million on average; • From 1986 to 1993, the seven years following the launch of national poverty reduction, the poor reduced from 125 million to 75 million, annually 7.14 million on average; • From 1994 to 2000, the seven years under the Eighth Seven Year Priority Poverty Reduction Program, the poor reduced from 75 million to 32 million, annually 6.14 million on average. • From 2001 to 2005, the reduced number declined to 23.65 million, annually 1.684 million on average, and the reduction is 2.5% of the total rural.

4. Changes on the Magnitude of Chinese Poor Measured by Chinese Criteria on Absolute Poor

5. Measured by the actually applied criteria in China which was formulated in 1999 and put to use from 2000: the reduction of poor on an yearly basis turn out to be 62.14 million, 61.03 million, 58.25 million, 56.17 million, 49.77 million and 40.67 million from 2000 to 2005, annually 4.3 million on average.

6. 1.1 Rural Poor • 1.1.2 Changes on Regional Distribution of Rural Poor • By region：In 2004, 14.3% of the absolute poor live in the east, 35.7% in the middle and 50.0% in the west and 16.8% of the low incomers live in the east, 35% in the middle and 48.1% in the west. The population in the three region is distributed largely to the contrary as 40.7% in the east, 34.9% in the middle and 24.3% in the west

7. In 2004, the incidence of absolute poor was 1.0%, 2.8% and 5.7% from the east to the west. • Reduction rate of the poor in western region prevails that in the mid and the east. From 2001 to 2004, the absolute poor and low incomers in the west reduced by 2.5 percentage points and 8.1 percentage points respectively, while the middle region was found 1.7 percentage points increase and 0.7 percentage point decline and the western region 0.9 percentage point increase and 4.1 percentage points increase.

8. By geography：In 2004, 51.4% absolute poor and 50.1% low incomers live in mountainous areas, 18.5% and 20.4% of them live in hilly areas, 30.1% and 29.5% in plain areas

9. The reduction rates of the poor in mountainous areas prevail that in hilly and plain areas. From 2001 to 2004, the incidence of absolute poor reduced from 8.6% to 6.5% in mountainous areas and that of low incomers reduced from 14.1% to 11.6%; the both reduced from 2.6% to 2.2% and from 5.9% to 4.9% in hilly areas; the rate for absolute poor increased from 2.5% to 2.7% and the rate for low incomers declined from 5.5% to 5.0%.

10. By the differential between main grain producers and the rest：In 2004, the absolute poor living in the two areas numbered 12.07 million and 14.03 million respectively. From 2001 to 2004, the absolute poor in main grain producer areas reduced by 930 thousand and 2.24 million in the other areas.

11. 1.1.3 Changes on the Composition of Rural Poor • Major fluctuations across the poverty line: In 2003, in the key counties for national assistance, among the 17.63 million absolute poor, 12.25 million absolute poor had their annual income exceeding the absolute poverty line, accounting for 69.9% of the total, 12.36 million people had their income returning below the poverty line, accounting for 60.3% of the total. Among the 29.46 million low incomers, 18.54 million had their annual income exceeding the low income poverty line, accounting for 60.3% of the total low incomers, and 12.20 million had their income returning below the line, accounting for 58.4%. 统计数据反映的每年收入低于温饱线贫困人口减少数量 2003年返贫人口数量比减贫人口数量高出８０万

12. Dynamic analysis on absolute poor between 2000 and 2003 reveals that: 65.7% of farmers had their income lower than absolute poverty line only 1 out of the 4 years in the period, 21.9% of farmers were in that situation for 2 out of the 4 years, 8.7% were in that situation for 3 out of 4 years and only 3.7% were in that situation for the entire 4 years. The analysis concluded that only 12.4% farmers of the total suffered chronic poverty for 3 or more than 3 years with their income below the subsistence line.

13. 7.4% poor of the households trapped in absolute poverty are so due to physical incompetence like handicapped or chronic illness. These groups are beyond the reach of civil relief and hard to survive only on poverty reduction efforts.

14. 1.1.4 Income for Rural Poor In 2004, Average per capita net income for rural households of absolute poor was 579 RMB and that for low incomers was 857 RMB, which is only 19.7% and 29.1% of the national average (2936 RMB). The income level of absolute poor in 2004 is equivalent to the national average in 1988, in another word, the poor is 15 years laggard the whole nation.

15. In terms of income composition, the poor and the low incomers make their living on single means with 2/3 of their income relying on household primary industry, namely, 396 RMB and 575 RMB for the poor and the low incomers respectively. 89.4% poor households and 88% low income households live solely or partly on agriculture, much higher than national average level (66.5%). In the mixture of income for poor and low income households, the component of wage or salary is 115 RMB and 194 RMB in absolute term and 19.9% and 22.7% in percentage to the total net income, 14.1 percentage points and 11.3 percentage points lower than national average.

16. Income in monetary terms: Per capita net cash income for poor households is 276 RMB, 52% of the total net income. Per capita net cash income for average households is 2135 RMB, 76.7% of the total net income. The two have a 25 percentage points gap.

17. In terms of the spectrum of incomers: those with income below 100 RMB take up 3.3% of the total poor, those between 100 and 200 RMB take up 2.5%, those between 200 and 300 RMB take up 5.4%, those between 400 and 500 RMB take up 15.9%, those between 500 and 600 RMB take up 22.4% and those between 600 and 637 RMB take 40.5%. The numbers indicate that the majority of the poor is lingering around the subsistence line, naturally resulting in the big fluctuations across the line.

18. Comparison of different incomer groups reveals that: In 2004, the poor accounted for 2.8% of the total rural population and their income 0.5% of the total. The low incomers accounted for 5.3% of the total rural and their income 1.5% of the total. The proportions of poor and low incomers were 0.2 percentage point and 0.5 percentage point lower respectively than the previous year. The decline of income outpaces that of population. The gaps between the poor and the rest keep enlarging.

19. 1.2. Urban Poor • Urban poor is distinct from rural poor by the follows： 1.2.1. It came to shape at a latter point of time. It consists of three components: First, laid-off workers. Reforms of State-own enterprises and blossom of market economy stripped a number of laborers from their job and left them unqualified for any other jobs; Second, newly emerging urban residents. As big and medium sized cities are pushing their boundaries forward to devour more and more farmland, farmers who gain the urban residence at the expense of the primary economic means find it hard to secure a stable income in the competitive cities. Third, new comers of labor market. Increase of job opportunities fail to match the increase of applicants. The latter entrants of labor market find nothing left for them.

20. 1.2.2. Urban poverty lines vary from city to city: the indicators in36 cities (2002) Beijing: 290RMB, Tianjin: 241RMB, Shijiazhuang: 182RMB, Taiyuan: 156RMB, Huhehaote: 153RMB, Shenyang: 205RMB, Changchun:169RMB, Harbin: 200RMB, Shanghai: 280RMB, Nanjing: 220RMB, Hangzhou: 270-300RMB, Hefei: 169RMB, Fuzhou: 200-220RMB, Nanchang: 143RMB, Jinan:208RMB, Zhengzhou: 180RMB, Wuhan: 210RMB, Changsha: 180-200RMB, Guangzhou: 300RMB, Nanning: 190RMB, Haikou: 221RMB, Chengdu: 178RMB, Chongqing: 185RMB, Kunming:190RMB, Guiyang: 156RMB, Lhasa: 170RMB, Xi’an: 156RMB, Lanzhou:172RMB, Xining:155RMB, Yinchuan: 160RMB, Urumchi: 156RMB, Dalian:221RMB, Qingdao: 200-210RMB, Ningbo: 260RMB, Shenzhen: 290-344RMB, Xiamen: 265-315RMB

21. In these cities including municipalities directly under the Central Government , provincial capital cities and municipalities separately listed on the state plan, the poverty line ranges from 155RMB to 344RMB, almost twice of the former. The average subsistence standard in all the cities was 154 RMB in 2005. If the standard is taken as the poverty line for urban areas, it should be annually 1848 RMB, 2.7 times higher than the poverty line in rural areas (683 RMB) and 2.0 times higher than the practically applied line (944 RMB).

22. 1.2.3. The growth of poor settled down following a period of continued expansion. The urban poor, regarded as those below the subsistence line and covered by the subsistence security system, was less than 2 million in 1996 when China employed the security system for urban residents. The figure increased to 2.81 million in 1999, 4.02 million in 2000, 11.70 million in 2001, 22.47 million in 2003 and 22 million now.

23. 1.3. Migrant Laborers to Urban Areas • 1.3.1. The magnitude of migrant laborers to urban areas There is no clear number of it in China. On the one hand, its definition is ambiguous, on the other, data related to migrant workers are hard to collect. We have at hand two figures, one is the number of employed in TVEs, the other is the number of those working outside their hometowns. In 2004, the former stood at 138 million and the latter stood at 102 million, adding up to 240 million. But the two figures overlapped with each other too some extent. In addition, there are other related figures indicating the huge magnitude of migrant workers. National transportation in 2004 Spring Festival reached 1.89 billion passengers , 670 million more than 10 years before. As it is the usual case that migrant workers take up over 60% of the total transportation during the Spring Festival each year, the number of migrant workers should be more than 180 million. Some estimate that 120 million out of the 200 million rural residents in China should be migrant workers.

24. 1.3.2. Features of migrant laborers • ①They are mainly engaged in non-agricultural sectors; • ②They spend most of time living and consuming in cities; • ③Most of them take the place of urban residents by doing what is less desirable for the latter ； • ④Their income is lower than urban residents. Statistics showed that in 2004, the income for migrant workers was around 8000 RMB, roughly a half of 15000 RMB, the income of their urban compatriots. If measured by the subsistence line for urban social security system, the resulted number of poor is not a little portion in these migrant workers. However, they are wealthier than farmers living in rural. In a word, these are the rich in rural and the poor in urban.

25. 2. Anti-PovertyMeasures in China • Chinese Government carries a pro-active policy against poverty in both rural and urban areas: The government fosters favorable climate, stimulate enthusiasm of the poor, give the poor a role to play in the campaign of poverty reduction and build a social security system in China to support the poor in a better way.

26. 2.1. Anti-Poverty Measures in Rural • Over the last two decades, China went along with a guideline/model of reducing poverty by development as the main and by relief as the complement and finally arriving at the establishment of a social security system. More specifically: The government helps the poor with labor capability by developing their economic means, helps the poor plagued by natural disasters by relief and post-disaster restoration and helps the poor bereft of physical ability by social security. In the first three quarters of 2005, the number of those benefited by rural subsistence security was 5661 thousand and the number covered by regular rural relief was 9482 thousand, adding up to 15143 thousand who are the beneficiaries of rural social security. The number is 27.3% higher than the same period of previous year and 16% higher than the end of last year. The number covered by regular rural relief alone is 16% higher than the same period previous year and 3.7% higher than the end of last year.

27. To keep updated to the changes of poor in rural, we should stick to three points and focus on three aspects to reduce poverty in the new century. • We should stick to the guideline of reducing poverty through development, bring about and maintain subsistence, and benefit the poor directly. • We should focus on village-based development, training to transfer the labor and industrialization.

28. Village-based development: We should reach out to villages and further, to households. Based on poor villages, the poverty reduction programs can absorb as many rurals and facilitate plan formulation, implementation by year, funding by phase and addressing the poverty step by step. • Training to transfer labor: We should give trainings to farmers on the skills that can help them work in non-agriculture sectors. • Industrialization: We should support the leading enterprises which are eligible as focusing on the processing or marketing of farm products, employing large numbers of the labor from poor areas, bringing the poor households into market by various linkages of benefit, contributing to reforms of industrial and employment structures in poor areas, conforming to set standards on the scale and operation indicators. These enterprises are to be supported to play a key role in reducing poverty.

29. 2.2. Anti-Poverty Measures in Urban • In November 2005, the State Council issued a circular on further expanding reemployment specifying the steps to help the urban poor. The aim is to improve social security and facilitate employment.

30. 2.2.1. Guideline: joining the efforts of job applicants, market and government to boost employment. ①Encourage self-seeking of jobs and self-employment; ②Encourage enterprises to offer job opportunities; ③Jobs for public welfare funded by government shall primarily meet the demands of those hard to find job. Those with difficulty shall be subsidized by social insure.

31. 2.2.2. Integrate employment in urban and rural, upgrade service and strengthen occupation training. • Provide job recommendation service free of charge; set up an incentive mechanism to subsidize job intermediaries giving free job service; reinforce information system of labor market and labor security in local.

32. 2.2.3. Improve social security and make it a driving force for employment. • New laid-offs not reemployed are entitled to unemployment insurance and subsistence allowance for urban residents. The trial coverage of unemployment insurance shall be appropriately expanded. Self-employed workers shall be regulated. Endowment insurance for the employed shall be made more flexible. The incentive linkage between insurance premium shall be reinforced. A virtuous interaction between employment and social insurance shall be established.

33. 2.2.4. The rights and benefits and other favorable conditions for migrant workers in urban shall be guaranteed. Discriminatory rules on migrant workers shall be lifted. Arbitrary charges on them shall be deleted. The lack of injury insurance, medical insurance, unemployment insurance and pension insurance for migrant workers shall be addressed. Trainings for them in the exporting rural and importing urban areas should be coordinated.

34. 2.3. Policies to support migrant workers • As migrant workers are different from urban residents, many problems remain to be addressed ranging from the protection of their legitimate rights, improvement of their employment climate and channeling of redundant labor. The circular issued this March is one of the counter-measures to this case. • Basic principles: Fairness. Higher quality of service and management. Integrated planning. Rational guidance. Local specialty. Long perspective.

35. Summarized as： • 1、Tackle the low and delayed salary for migrant workers; • 2、Regulate the employment of migrant workers; • 3、Enhance occupation service and training; • 4、Upgrade social security for them; • 5、Provide public service needed; • 6、Improve the mechanism to guarantee their rights and benefits; • 7、Lead them to be employed locally or near.

36. 3. IPRCC Role in Poverty M&E • 3.1. Why? • Poverty M&E is important to poverty reduction. Both the decision-making and its enforce are indispensable to poverty reduction. Decision has to be made on the result of effective M&E which accurately and adequately reflect the reality. Poverty reduction can go along without M&E, but without M&E, it can not go along well.

37. Past practice proved that the achievements made in China is closely linked with fruitful endeavors in M&E. • We should highly regard M&E and enhance out capability in this aspect to better study poverty issues.

38. 3.2. IPRCC has two functions in M&E： • 3.2.1. PADI The PADI Coordination Meeting last May agreed to set the PADI Secretariat in IPRCC. The secretariat will follow its chief to: ①Enhance the capacity of all member states in data collection and analysis ②Facilitate data sharing among the members.

39. 3.2.2 Poverty M&E in China In terms of the content of M&E, there are two types of it. The first targets the static situation of poor households including the monitoring on poverty and derived result of poverty. This is so-called poverty monitoring, conducted independently by NBS.

40. The second targets the anti-poverty activities done by the government and the society and the direct impact of these activities, including the implementation of poverty reduction policies, dynamic monitoring on poverty reduction activities and monitoring of funded programs. This is so-called poverty statistic monitoring which is conducted by LGOP.

41. Statistics related to poverty are scattered in a number of government agencies, like the agencies of Health, education, population and family planning, civil affairs ad labor and social security. It is critical to bring about a mechanism of data sharing among all the agencies. It is believed a role to be played by LGOP. • IPRCC can help in this aspect: First, it can help LGOP with poverty statistics monitoring by, to name just one, assisting the construction of database; Second, it can help LGOP establishing a coordinated platform of poverty data collection and analysis in China.

42. Thank You