Rural Poverty Reduction and Economic Transformation in China : A Decomposition Approach
Rural poverty in China fell from 96 percent in 1980 to less than 1 percent of the population in 2019. Using PovcalNet data for China and a set of comparable countries, this paper estimates growth-poverty elasticities. It finds that China stands out...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/653101636992070146/Rural-Poverty-Reduction-and-Economic-Transformation-in-China-A-Decomposition-Approach http://hdl.handle.net/10986/36602 |
| Summary: | Rural poverty in China fell from 96
percent in 1980 to less than 1 percent of the population in
2019. Using PovcalNet data for China and a set of comparable
countries, this paper estimates growth-poverty elasticities.
It finds that China stands out for its record of sustained,
fast growth, rather than because of an unusually high
growth-poverty elasticity. In addition, changes in mean
consumption, rather than changes in the distribution, drive
poverty reduction. Furthermore, until 2010, changes in
inequality attenuated the impact of growth on poverty. The
paper also studies which channels mattered the most for
rural poverty reduction by applying a decomposition
framework to multiple rounds of Chinese Household Income
Project surveys conducted in 1988, 1995, 2002, 2007, 2013,
and 2018. The findings show that broad-based,
labor-intensive growth in agriculture was initially the main
driving force for rural poverty reduction, followed by the
expansion of non-agriculture sectors. As the country’s
poverty rate approached 10 percent by 2007, transfers from
migrant workers and, later, public transfers became the
major drivers of further rural poverty reduction. Throughout
the period, the fall in the demographic dependency rate also
played a significant role. As China’s living standards
continue to rise, the official definition of poverty will
have to adjust to the higher minimum. Continued structural
transformation and the inclusive growth agenda retain
crucial importance for sustained poverty reduction. |
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