The 8-7 National Poverty Reduction Program in China

Report
The 8-7 National Poverty
Reduction Program in China:
the National Strategy and its
Impact
Wang Sangui, Li Zhou, Ren Yanshun
Background: Evolution of China’s
Poverty Reduction Policies
 During the post-1978 reform period, large-
scale poverty reduction benefiting from
specific government policies as well as fast
economic growth has been one of China’s
greatest accomplishments.
 Rural poor population decreased from about
200 million in 1981 to 28 million in 2002 (official
estimation);
 Or from about 490 million to 88 million (1$ one
day poverty line).
The Numbers of Poor in China, 1986-2002
400
o fficial est im at ed n um ber
350
o f rural p o o r (in m illio n )
num be r poor ( in m illions)
wit h in co m e o f less t h an
300
U S$ 0 .6 7 /day
(ap p ro x im at ely )
250
n um ber o f rural p o o r (in
200
m illio n ) wit h
co n sum p t io n o f less t h an
U S$ 1 /day
150
100
n um ber o f rural p o o r (in
m illio n ) wit h in co m e o f
50
less t h an U S$ 1 /day
0
1986
1988
1990
1992
1994
1996
1998
2000
2002
Background (Cont.)
 China’s poverty reduction policies can
roughly be classified into four phases
since 1978.
 Rural Reform (1978-1985)
 The National Targeted Poverty Reduction
Programs (1986-1993)
 The 8-7 Plan (1994-2000)
 Poverty Reduction Strategy in the New
Century (2001-2010)
Background (Cont.)
 Poverty reduction was much more
dramatic in early 1980s and during
1994-1996 when fast economic growth
were accompanied by the increases of
the rural-urban terms of trade as
agricultural prices increased.
Objectives of the 8-7 Plan
 The overall objective of the 8-7 Plan was to
lift the majority of the remaining 80 million
poor above the government’s poverty line
during the seven year period 1994-2000.
 Where are also a number of specific
objectives.
Measures of the 8-7 Plan
 Designate 592 national poor counties ;
 Assign poverty reduction responsibility to the


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

local governments (“four to provinces”);
Establish a framework for East-West
counterpart poverty reduction activities,
Strengthen departmental poverty reduction
efforts,
Significantly raise poverty reduction funds.,
Introduce tax reduction policies ,
Experiment with different poverty reduction
approaches,
Encourage international and NGOs to
contribute to poverty reduction .
Organizational Structure of the 8-7 Plan
L ea d in g G ro u p fo r P o v erty R ed u ctio n u n d er th e Sta te C o u n cil
NDRC
CDRB
O LG PR
DOF
BOF
PO LG PR
PA B C
C O LG PR
CABC
To w n sh ip go vern m en t
Villag e co m m ittee
H o u seh o ld s
ABC
O th er M in istries
O th er D ep artm en ts
A B C b ran ch es
O th er B u reau s
C oun ty L G P R
P rovin cial L G P R
PDRC
MOF
Fund Allocation
 RMB 113 billion (or US$ 13.6 billion), or about
5 to 6 percent of total govt. expenditures were
funded from the central govt.
 The allocation of poverty funds mainly
reflected the numbers of poor counties and
poor population in each province and the
bargaining power of local governments.
 Within provinces, allocation to counties
followed different criteria.
 Fund allocation among sectors is in favor of
production activities and infrastructure
construction.
The Main Types of Poverty Programs
 Subsidized Loans
 The subsidized loan program was to
support the production activity and
economic development of poor areas as
well as the poor directly ;
 accounting for over one half of the total
poverty funds;
 Managed by ABC;
 Poor targeting and low repayment rate are
major problems.
The Main Types of Poverty Programs
(Cont.)
 Food for Work
 The FFW program aimed at making use of surplus labor
in poor areas to build infrastructure in poor areas;
 the FFW program accounted for nearly 30 percent of the
total poverty funds;
 Managed by NRDC;
 Has done a relatively good job in constructing
infrastructure that has benefited poor areas, but could
have done better in immediate poverty alleviation.
The Main Types of Poverty Programs
(Cont.)
 Budgetary Grants
 Government budgetary grants supported investment in
poor areas including productive construction projects,
small-scale infrastructure, basic education and health
care, culture promotion, science and technology
extension, training and industry promotion ;
 accounted for less than 20 percent of the total poverty
funds;
 MOF has been responsible for the budgetary grants ;
 Their effectiveness could have been improved by
measures to limit their diversion .
Other poverty reduction efforts
 Departmental Efforts
 East Supports West
 Poverty Reduction Activities of NGOs
 Poverty Reduction Activities of International
Organizations
Outputs
 The magnitude of outputs is enormous . The
rural poverty monitoring survey indicates that
during 1997-2001:
 the 8-7 Plan directly supported 30.7 million





households and 125 million persons,
employed 17.24 million workers in poverty
reduction activities,
newly developed 3.25 million hectares of cash
trees,
320 thousand km of roads ,
360 thousand km of electricity lines ,
drinking water for 53.5 million persons and 48.4
million animals, etc.
Impact
 Officially designated “poor” counties
delivered higher than average growth in grain
and agricultural production, and in household
net income.
 Empirical analysis shows that household
income and consumption in the officially
designated “poor” counties grew significantly
faster than in other counties.
 The rate of return of poverty investments
were estimated to be over 10%.
 What is not sure is how the benefits are
distributed within the county.
Key Factors
 Stable political environment and rapid economic




growth established an important context for
successful poverty reduction.
It is especially agricultural GDP growth that is
highly correlated with poverty reduction.
Similarly to the agricultural growth, also the rapid
development of the private economic sector
contributed to poverty reduction.
Government commitment and the strong
resources mobilizing capacity of Chinese
government .
The implementation of the 8-7 Plan was
supported by a well-established administrative
system.
Institutional Innovation
 China turned from relief dependent
poverty reduction to poverty reduction
emphasizing development.
 China has moved from purely
government-led poverty reduction effort
to involving the entire society.
 China set up a multi-departmental
coordinating mechanism.
Learning and Experimentation
 China’ poverty reduction is a process of
constant learning and exploration.
 There have been a number of changes in
poverty reduction project and fund
management.
 The mode of delivery and management of
credit funds for poverty reduction has
changed.
 China introduced participatory approaches
to poverty reduction.
Lessons
 Economic Growth Is Critical for Poverty
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
Reduction ;
Basic Insurance Programs Need to
Complement Poverty Reduction Effort;
Targeting and Participation of the Poor Matter ;
Objectives Need to Be Clear ;
Human Development Deserves Special
Emphasis ;
Poverty Alleviation Requires a Coordinated
Effort ;
Poverty Alleviation Effort Should Break the
Traditional Rural-Urban Segmentation .

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