Determinants of Rural Poverty Reduction and Pro-poor Economic Growth in China

1. Determinants of Rural Poverty Reduction andPro-poor Economic Growth in China Jikun Huang Center for Chinese Agricultural Policy Chinese Academy of Sciences Qi Zhang Department of Political Science Northwestern University Scott Rozelle Institute for International Studies Stanford University

2. Shares of rural population under poverty, 1978-2005 Based on official poverty line US$ 1/day in PPP

3. What have been major driving forces of massive poverty reduction in China? • General economic growth? • TVEs and off-farm employment? • Trade and FDI policy? • … • Agricultural growth? • Income distribution? • Poverty fund/policy? • ???

4. Overall goal To have a better understanding of the major determinants of massive poverty reduction in China, particular the effects of overall economic growth, agricultural development, and rural-urban income disparity on reduction of rural poverty.

5. The rest of presentation • The correlates of poverty reduction and major driving forces • Impacts of major factors on rural poverty incidence • Concluding remarks

6. Real GDP in 1978-2005 Economy in 2005 was about 12 times compared to that in 1978

7. Per capita GDP and rural poverty incidence, 1978-2005

8. Employments in TVEs and rural poverty incidence across provinces, 1985-1997 Ratio of TVE employments and rural labor

10. Annual growth rate of agriculture GDP and annual change of poverty incidence by province, 1979-2002

11. Per Capita Income: Rural vs Urban (at constant 2000 prices) Enlarging income disparity between rural and urban

14. Simulation of the impacts of economic growth on the poverty reduction in rural China

15. Concluding remarks • China has made remarkable progress in its war on poverty since the launching of economic reform in the late 1970s. • Economic growth is the essential and necessary for a massive reduction of rural poverty, particular in the early stage of development. • However, economic growth itself is not sufficient conditions for long term poverty reduction, the nature of growth, particular agricultural development, off-farm employment for the poor, and the balanced growth between rural and urban are also important.

16. Concluding remarks • Declining impacts of growth on poverty reduction indicate that future policies should give more priority to make growth more broadly based so that the poor will not be left behind during the course of growth; Poverty reduction will have to rely more on well-targeted, pro-poor policy interventions that are designed to reach the chronic poor.