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“China's formula to reduce poverty could help developing nations” South China
Morning Post, 29 March, 2013,
http://www.scmp.com/news/china/article/1202142/chinas-formula-reduce-poverty-
could-help-developing-nations
Brett Rierson, China representative for the World Food Programme says the nation
offers a model for developing countries. "China invested in agriculture to reduce
poverty and successful agricultural projects were built up from the grass roots.
These were not top-down solutions," he said.
http://www.china.org.cn/government/whitepaper/node_7142125.htm
The Chinese government aims its poverty reduction programs at all people
whose income is below the poverty line, while putting emphasis on the old
revolutionary bases in the central and western regions, areas inhabited by
ethnic minorities, border areas and destitute areas. It includes 592 counties
in these areas in the key programs of the nation' s poverty reduction effort.
The central government and local governments at all levels formulate
special programs, appropriate special funds and concentrate resources
to improve infrastructure construction, develop specialty and
competitive industries, improve social services and enhance the
people's quality in these areas. The local governments of other
impoverished counties, townships and villages in the eastern, central and
western regions are mainly responsible for their respective poverty
reduction programs.
Over the past ten years, the central and local governments have been
constantly adjusting their structures of financial expenditure and gradually
increasing the financial input into poverty reduction programs. The
financial input increased from 12.75 billion yuan in 2001 to 34.93 billion
yuan in 2010, with an average annual growth rate of 11.9 percent, and the
accumulative input totaled 204.38 billion yuan in these ten years. For a
breakdown, funds appropriated by the central government for poverty
reduction programs increased from 10.002 billion yuan in 2001 to 22.27
billion yuan in 2010, with an average annual growth of 9.3 percent, and the
accumulative input reached 144.04 billion yuan over these ten years. The
distribution of poverty relief funds reflected the priority principle. The
accumulative financial input to the key counties in the national and
provincial development-oriented poverty reduction programs over these ten
years reached 145.72 billion yuan, accounting for 71.3 percent of the total
input and with the average in-put for each county reaching 136 million
yuan; the central government appropriated a total of 135.62 billion yuan for
poverty reduction in 22 provinces (autonomous regions and municipalities
directly under the central government), including 87.7 billion yuan for 12
provinces (autonomous regions and municipalities directly under the
central government) in the western regions.
Poverty reduction through education. Over the past decade, the state has
been vigorously developing education, helping large numbers of students
from economically poor rural families acquire necessary skills through
vocational education and find stable employment in cities/towns, thus
shaking off or alleviating poverty in these families. From 2001 to 2010,
some 42.89 million students graduated from secondary vocational
schools, and most of them were from rural families or impoverished
urban families. The state constantly improves the subsidy system for poor
students in compulsory education, senior high school education and higher
education to relieve the financial burden on poor families. The government
also builds schools for immigrants, and encourages immigration for
ecological protection purpose.
https://play.google.com/books/reader?printsec=frontcover&output=reader&
id=xyclPRaysyYC&pg=GBS.PA4
(on page 4)
Third, poverty reduction was more significant in the period from 1993-96,
especially for rural poverty. The most important causes of this
significant reduction is that the Chinese government increased the
purchasing price of agriculture products by 75% especially grain. The
official purchasing prices of grain has been doubled during 1993 to 1996.
From another study (The World Bank 1997) we know that the share of
grain income decline from the poor to rich so the increase of grain price has
benefited the poor and near poor (around 0.75 to 1 dollar per day poverty
lines) and the middle income group most.
Xiaxin Wang, “The Effect of China’s Agricultural Tax Abolition on Rural
Families’ Income and Production”, China Center for Economic Research, National
School of Development, Peking University
http://cerdi.org/uploads/sfCmsContent/html/367/Wang_Xiaxin.pdf
(China had long been an agricultural nation in the history, and agricultural
tax had contributed a lot to the government’s fiscal budget in the past.
When the People’s Republic of China was found in 1949, the
agricultural tax accounted for 40% of China’s fiscal income. But with
China’s economy growing rapidly in recent years, China has gradually
become an industrial country. The contribution of agricultural tax to
the government’s fiscal revenue dropped to 2.6% in 2002. In the
meantime, China faced a large and increasing divergence in urban and rural
families’ living levels. In 2002, the per capita net income in a
representative urban family is 7702.8 Yuan, while in a rural family the
number is only 2475.6 Yuan.2 Thus, to increase rural families’ wellbeing,
the government initiated the rural tax and fee reform in 2000.)
The first stage of the reform is from 2000 to 2003, which is also called
the tax-for-fee reform because its main content is to eliminate all the
fees in rural China, leaving agricultural tax the only tax and fee anyone
undertaking the agricultural work should pay. The second stage is
from 2004 to 2005, with the end of abolishing the agricultural tax. In
2003, the government announced that the agricultural tax would be
abolished within 5 years. In fact, it was abolished in 3 years. Since
January 1st, 2006, the 2600 year-old agricultural tax has been terminated in
this country. This paper investigates the effect of the second stage of the
reform on rural families’ income and production.
Table 13 shows that the tax abolition significantly increased per capita
net incomes. In addition, the per capita pre-tax net income also increased
in response to the tax abolition, which suggests that the tax abolition may
have stimulating effects on rural production. From the result in the second
column, it can be seen that during 2003-2005 one percentage point decrease
of the agricultural tax rate increased per capita net income by 2.5%. Since
in 2003 the average tax rate is 3.2%, the tax abolition increased per capita
net income by 8% (2.5%*3.2). In 2003, per capita net income was 3738
yuan, thus the tax abolition increased per capita net income by 299
(3738*8%) yuan. Note that in 2003, the agricultural tax per paid by each
household with was 181 yuan; on average there were 4 individuals in a
family. So each individual paid 45 yuan agricultural tax. Therefore, the tax
abolition had quite significant impact on increasing farmers’ actual income.
The contribution of this paper has two aspects. On the theoretical part, our
paper emphasizes the important effect of government policy on household
behaviors potentially by affecting their expectations. The gradual
decrease in agricultural tax rate worked to strengthen farmers’
expectation of or belief in government’s support on agriculture, which
led them put more resources in agricultural production. Although the
agricultural tax is a lump-sum tax, its abolition could have effects on
household behaviors in that the abolition pace exceeded people’s
expectation.
A third land reform beginning in the late 1970s re-introduced the family-
based contract system known as the Household Responsibility System,
(From Wikipedia)
The system was so warmly accepted by farmers that by the end of 1983 it
had incorporated more than 90 percent of the country's farming households.
The system not only released rural productive forces but also turned out to
be the breakthrough of the rural reforms.
Thirdly, the system transformed production mode in rural areas and changed
farmers' lifestyle. It helped elevate farmers from self-sufficient petty producers to
commodity producers and managers, while promoting the development of rural
market.
Since the household contract responsibility system was implemented more than
two decades ago, China's agricultural production has bee increasing at an average
annual rate of 6.7 percent, well beyond the world average. The annual growth rate
grain production is 2.7 percent, with total grain output exceeding 500 billion
kilograms in 1996, making China the largest grain producer in the world
(From Wikipedia)
Since 1983, China has launched a series of land policy reforms to improve
land-use efficiency, to rationalize land allocation, to enhance land
management, and to coordinate urban and rural development. These land
policy reforms have yielded positive impacts on urban land use as well as negative
socioeconomic consequences. On the positive side, they have contributed to
emerging land markets, increased government revenue for the financing of massive
infrastructure projects and provision of public goods, and improved the
rationalization of land use. On the negative side, problems such as loss of social
equity, socioeconomic conflicts, and government corruption have emerged
Dividing large farms into smaller units often means that more food is produced per
hectare. This is happening in a number of countries. In El Salvador, for example, a 10%
rise in land ownership has boosted income by 4% per person. In India, the states where
poverty has fallen the fastest are those that have implemented land reforms. Ethiopia has
transformed a feudal land system into family farming.
Most strikingly, in China, the shift from large farms to smallholdings (in the period
1977 - 1985) witnessed a unprecedented increase in farm output, thus enabling
millions of people to rise out of poverty.
Land reform can increase both employment and income. Small farms employ more
people per hectare than the larger units, often to the benefit of the landless and
unemployed. And owning land means that family farmers often secure the bank credit
that was previously denied them.