Poverty in China: Just a little bit richer | The Economist

THE villagers of Dingjiayan subsist on corn, potatoes, sunflowers and the few vegetables they grow. They sell the surplus and buy meat and a few other necessities in the nearby county town of Tianzhen. Its mud-and-brick buildings, and its setting among dusty hills in the north-eastern corner of Shanxi province, offer little to the occasional visitor to distinguish it from countless other parts of China where hard work brings but a meagre living. Yet Tianzhen county, of which Dingjiayan is a part, is one of just 592 areas that the central government designates as “impoverished”.

China’s official threshold for rural poverty is an annual income of 2,300 yuan ($370) per person. But the criteria for classifying a village or county are complex and often revised. They include comparisons of poverty rates and average incomes with those of the province, adjustments for inflation, quotas on the number of villages that may count as poor and a ban on including villages that own collective enterprises, whatever their income level. Though dozens of places have been listed and delisted every few years since the 1990s, the total has remained curiously fixed—at 592.

An “impoverished” designation brings substantial subsidies. But Ding Tianyu, who has lived in Dingjiayan for all his 73 years, says he hardly notices. Most households earn about 10,000 yuan a year, he says, and get a subsidy of 80 yuan for each mu (614 square metres) of land they farm. “I have five mu,” Mr Ding says. “When there is enough rain I am fine, and when I get the subsidy I feel just a little bit richer.”

With bustling shops and a fair number of pricey cars on its roads, Tianzhen’s county town does not, by Chinese standards, feel impoverished. There is little disclosure about how subsidies are used, says a restaurant owner. “We are told a lot of it goes into the local credit union and that we can apply for loans there, but they only lend to people with good connections.”

In 2012, when the list was last updated, Xinshao county in Hunan in south-central China was added. Local officials used the county’s official website to trumpet this “exceptional good tidings” after two years of “arduous efforts” and “untold hardships”. A large roadside board added its “ardent congratulations”. After nationwide criticism, the officials accepted that their words had been badly chosen. But their cheer was understandable: the official designation was worth an extra 560m yuan for the county each year from the central government.

The episode caused many to question the value of the system and the perverse incentives it creates for local governments. A commentary last year in the Legal Daily claimed that many places were misusing the funds and had fudged their figures to qualify as impoverished. Officials from the State Council Leading Group Office of Poverty Alleviation and Development, which manages the list, have acknowledged widespread abuses. In February it banned lavish new buildings and “image projects” in officially designated poor areas.

State television reported on two counties, one in Ningxia and one in Hubei, where local governments spent 100m yuan each on new headquarters. In March, during China’s annual full legislative session, the council’s poverty head, Liu Yongfu, raised a different question about the programme. He told the Southern Metropolis, a newspaper, that hundreds of counties would be taken off the list by 2020. “If a poor area as big as a county still exists, then can Chinese society still be called moderately prosperous?” he asked.

Attainment of a “moderately prosperous society” is a goal that previous Chinese leaders set and that Xi Jinping, the current president, has adopted as well. Much progress has been made since reforms began in earnest in the late 1970s. China claims to have lifted 620m people out of poverty since then. Others may quibble over that number—the World Bank puts it at 500m—but few question the premise that China deserves immense credit for alleviating so much poverty.

Much still remains, however. A little uphill from Dingjiayan sits a smaller village, Dingyuanyao. Its higher elevation means it gets less water, and a resident says most of its 90 residents will clear just 1,000 yuan a year after paying for seeds and fertiliser. Some own motorbikes and televisions, and they are grateful for the basic health insurance they receive. They laugh in unison when asked if they receive subsidies. The arrival of electricity 30 years ago was a vast improvement, they agree. But little has changed in their lives since then.

via Poverty in China: Just a little bit richer | The Economist.

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