Thursday, October 14, 2010

China's poverty reduction gains

The left cannot ignore China’s poverty reduction achievements

By Reihana Mohideen

China’s achievements in reducing poverty have been outstanding. From 1978 – when the restructuring of the Chinese economy began -- to 2007 the incidence of rural poverty dropped from 30.7 percent in 1978 to 1.6 percent in 2007. The biggest drop took place between 1978 and 1984 when the number of rural poor almost halved, from 250 million in 1978 to 125 million in 1985. During this period the per capita net income of farmers grew at an annual rate 16.5 percent. Urban poverty, measured by an international standard poverty line of US$1 per day, reduced from 31.5% in 1990 to 10.4% in 2005. No other third world country has achieved so much and made such a significant contribution to reducing global poverty, as China has, over this period.

Between 1978 and 2007 per capita income has increased significantly. Inflation adjusted per-capita disposable income of urban residents grew at the average annual rate of 7.2% for urban residents and at 7.1% for rural residents. While the gap between the rural and urban areas still continues (and has even increased across some development indicators), the fact remains that virtually the entire population has been able to greatly increase consumption of food, clothing and shelter. According to the United Nations “China now has largely eliminated absolute poverty and is meeting the food and clothing needs of its 1.3 billion people”.

And despite the significant gaps between rural and urban areas, between richer and poor regions, migrant and other workers and the increasing class divisions, there is a degree of equalisation of income growth which even has many capitalist commentators bewildered. Higher household incomes has allowed for improvements in nutrition, clothing and housing. Examples include a significant reduction in undernourishment: in 1981 some 30% of China’s population was undernourished and this dropped to 12% by 1997; between 1990 and 2005 the prevalence of underweight children fell from 19.1% to 6.9% and stunting in children under the age of five fell from 33.4% to 10.5%. The greatest reduction in child malnutrition took place in rural China. The country’s under-five child mortality rates dropped steadily from 40 per 1000 live births in 2000 to 18.1 in 2007 – far lower than third world averages. Maternal mortality (that directly impacts on child mortality) dropped from 53 per 100,000 live births in 2000 to 36.6 in 2007 – well below third world averages of 440 per 100,000 live births. China’s average life expectancy was 71.4 years in 2000, higher than averages for third world countries.

These are significant gains for third world countries today and especially so given the sheer numbers of women and children that it involves given the size of China’s population. This is partly related to a massive increase in healthcare spending – total per capita spending on healthcare from all sources – government, private households social -- increased by 1300 per cent from 1978 to 2006. While the effective privatization of healthcare resulted in a massive shift in the responsibility of healthcare spending on to private households, nevertheless, even government spending increased by nearly 700%, to 7.9 times the 1978 levels, an average annual increase of 7.7%.

There are major inequalities that continue to widen in China as a result of the restructuring of the economy along capitalist lines. The state which was previously responsible for almost 100% of health expenditure now only contributes around 18% of total expenditure (compared to over 70% in Western Europe) and large sections of the population especially in rural areas could not afford healthcare. In an attempt to address these inequalities in 2009 the government announced major healthcare reforms, including the provision of basic health insurance cover for 90% of the population.

Class differences are widening along with income gaps. In 2006 the per capita disposable income of the richest 10 percent of families was 9 times more than the poorest 10%. The urban-rural income gap continues to widen – 2.8 to 1 in 2000 to 3.3 to 1 in 2007. The per capital GDP in Shanghai was 65,347 Yuan in 2007 compared to Guizhou at 6,835 Yuan in the west. While Shanghai and Beijing have attained levels of development closer to the industrialized countries such as Portugal, poorer provinces like Guizhou are comparable to Botswana and Namibia. Gender gaps are widening in sex ratio at birth, with the number of new born male children and numbers of female children widening over time, with no sign of declining (these trends will be analysed in future articles). Nevertheless, the fact remains that the country has made major strides in reducing poverty, on a human scale that no other third world country has achieved, and which is perhaps historically unprecedented.

Despite the restructuring of the education sector which resulted in individuals taking primary responsibility for education costs, China has made remarkable progress in its education indicators, partly due to subsequent measures to partially reverse the earlier restructuring policy. Between 1994 and 2001 less than 2% of resources came from national government, with town and township governments responsible for nearly four fifth of China’s compulsory education costs. Because local government revenues barely covered staff salaries the financial burden fell on the people who had to start paying fees, resulting in increasing drop-out rates of poor students, especially in the rural areas and poorer provinces. In a partial policy reversal the central government exempted rural students in western China (where dropout rates were high) from tuition and miscellaneous fees, and by 2007 the government had decided to waive fees for rural compulsory education throughout the country, and provide free text books and boarding expenses. In 2008 fees were waived for urban compulsory education as well. In 2005 the annual education budget was 2.5% of a vastly expanded GDP – a 60 fold increase from 7.5 billion Yuan in 1978 (around 2% of the GDP) to 453 billion Yuan in 2005.

Enrollment rates have increased – 99% at primary school level and 95% at junior middle-school – and adult literacy rates rose to over 90% in 2006, higher than the global average of 78%. The average number of years of schooling received by people 15 years and over rose from 5.3 years in 1982 to 8.5 years in 2005.

The socialist movement, especially in the Asia region, must study and attempt to understand these developments. Simply placing China in the ‘going capitalist’ basket and ignoring developments in the country is a big mistake. Undoubtedly the gains of the great Chinese revolution of 1949 has laid the basis for these developments, including land reform that broke the back of landlordism and semi-feudal relations in the countryside (unlike in the Philippines or even India today) and which laid the basis for major strides in human development, so that when capitalist restructuring was introduced the levels of health, education and life expectancy, for example, were better than for a majority of third world countries at the time. And even today there are several third world countries who are yet to achieve the levels of development achieved by China in 1980.

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