Participating in Global Poverty Governance: China’s Approach

China has made remarkable achievements in poverty reduction through institutional designs and practices in line with its national conditions. It can explore ways to participate in global poverty governance through bilateral, multilateral and thirdparty cooperation, and contribute to the UN 2030 Agenda.

The UN 2030 Agenda for Sustainable Development sets the goal to “end poverty in all its forms everywhere” by 2030. To achieve this goal, it is necessary to build a system of global poverty governance, which includes not only strengthening the Official Development Assistance (ODA), but also enhancing South-south cooperation. Summarizing China’s experience in poverty alleviation and reviewing the major issues facing global poverty governance can help clarify China’s approach to participation in the governance, and provide reference for international cooperation in poverty elimination.

Challenges to Global Poverty Governance

Although at the UN level, the world has reached a consensus on eliminating all forms of poverty by 2030, global poverty governance still faces huge challenges with regard to the scale and distribution of population worldwide in poverty, ODA, South-south cooperation, capacities of developing countries, as well as models of economic growth and social development.

Great scale and uneven distribution of global population in poverty

First, the world’s population in poverty are in great scale. The global poverty monitoring data released by the World Bank in 2018 shows that according to the extreme poverty standard of $1.9 per person per day based Zhang Xiaoying

on international purchasing power parity (PPP) in 2011, the incidence of global poverty decreased from 35.9% in 1990 to 10% in 2015, a decline of more than 70%. However, at the end of 2015, there were still nearly 736 million people living in extreme poverty worldwide, with the incidence of poverty in sub-saharan Africa reaching over 40% and the total number of poor people still increasing.

Second, multi-dimensional poverty is severe throughout the world. Regarding the dimensions of poverty, in addition to income poverty, poverty reduction in multiple dimensions are faced with greater challenges in terms of education, health, household electricity, drinking water, and sanitation facilities, etc. Poverty does not only refer to the lack of income or consumption, but in most cases the deficiency of compulsory education, basic public health services, and basic standards of living, etc. The global Multi-dimensional Poverty Index (MPI) released by the United Nations Development Program (UNDP) comprehensively evaluates multi-dimensional poverty from 3 dimensions including education, health and living standards and 10 indicators. According to monitoring results in 2018, 1.34 billion people in 105 countries suffered from multi-dimensional poverty, accounting for 23.3% of the total population of these countries. This figure is much larger than that calculated based on the World Bank’s $1.90 threshold for those living in extreme poverty.

Third, the world’s population in poverty are distributed unevenly. Subsaharan Africa and South Asia are key regions facing challenges of poverty reduction. According to the World Bank’s standard for extreme poverty, the number of people living in extreme poverty in sub-saharan Africa increased from 278 million in 1990 to 409 million in 2010, and to 413 million in 2015. After 2030, 90% of the world’s extreme poor will be in sub-saharan Africa.1 According to the UNDP’S MPI, 40.6% of the world’s multi

dimensional poor live in South Asia and 41.6% in sub-saharan Africa. It should be noted that 67% of the world’s multi-dimensional poor live in middle-income countries.2 This means that global poverty governance should not only focus on low-income countries, but also on middle-income ones.

Difficulty in meeting financing needs

Since the 1960s, the ODA, official development assistance from developed countries to developing countries, provided by the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD), has always been the main source of funds for global poverty governance. The ODA is ultimately allocated to the least developed countries through bilateral and multilateral aid mechanisms to boost economic growth, combat inflation and reduce extreme poverty. Currently, the ODA has two main problems.

First, the total amount of funds is insufficient to meet the financial needs of poverty eradication in developing countries. Although the total amount of ODA is growing, it is still far from enough to meet the needs of global poverty governance. In terms of the ODA received per capita, the historical peak was only $21.19 per person, which is insignificant compared with the huge demand for investment in poverty reduction among developing countries.

Second, the limited ODA funds are unreasonably structured and imprecisely matched with the needs of developing countries. The ODA has many uses, such as promoting economic growth, stabilizing the monetary system, facilitating economic and social restructuring and eradicating poverty. As a result, the very limited funds are used in a wide range of areas. Moreover, the ODA’S allocation of funds does not precisely match the needs of developing countries. The population in multi-dimensional poverty in low-income countries, which receive 42.1% of the ODA, only

account for 28% of the world’s total population in poverty. By contrast, the multi-dimensional poor in low- and middle-income countries account for 66% of the world’s whole, while only using 49.4% of the ODA.3 Pakistan, Nigeria and India, three countries that are home to large numbers of multidimensional poor people, only receive ODA at a per capita level of $2.30, $1.40 and $0.64 respectively.

Lack of consensus under existing South-south cooperation

In addition to the ODA, another important instrument of global poverty governance is South-south cooperation among developing countries. However, both bilateral cooperation and the third-party cooperation advocated by the United Nations are project-based, lacking in overall design and planning. They are temporary, simple and small-scale. For example, to meet the specific needs for African countries’ development, Turkey has carried out the African Agricultural Development Plan, the African Health Plan and the African Vocational Training Plan, mainly in forms of capacity-building projects and social services such as building schools and hospitals.4 Meanwhile, Brazil mainly offers agricultural technical assistance to Latin American countries and Portuguese-speaking countries in Africa.

Moreover, South-south cooperation also lacks a conceptual design or mechanisms for poverty reduction cooperation that are recognized by all. The aid provided by developed countries to developing countries is in accordance with the DAC’S Recommendation on Terms and Conditions of Aid, which includes not only requirements on the amount of funds, but also specific provisions on aid principles, priority areas and priority countries. However, as for South-south cooperation, although the UN has been guiding the cooperation among developing countries,

and developing countries have reached a lot of consensus, there is still no specific cooperation principles or mechanisms for poverty eradication, and South-south cooperation remains loose. Even though emerging economies have become increasingly active in international affairs in recent years and established high-level consultation mechanisms such as BRICS, they still tend to go their own ways in the field of development cooperation.

Insufficiency of developing countries’ capacity

The lack of capacity for poverty reduction among developing countries is mainly reflected in the following three aspects.

First, they lack the capacity to formulate strategic plans for poverty reduction. Especially for sub-saharan African countries under the lasting influence and intervention of the World Bank and the International Monetary Fund (IMF), they have to follow the Poverty Reduction Strategy Papers (PRSPS) formulated by international development experts, and have no ability to independently design their own poverty reduction plans according to their national conditions. In the implementation of bilateral and multilateral aid projects, international organizations focus on good governance, which usually includes effective anti-corruption, a sound accountability mechanism, reasonable management of public resources and a complete legal system.5 Correspondingly, the empowerment of vulnerable groups becomes a core philosophy of poverty reduction projects by international organizations. With this seemingly right and just concept, the World Bank and the IMF focus on strengthening democratic institutions when providing assistance programs. However, decades of experience has shown that there is no inevitable relationship between increased democracy and reduced poverty.

Second, they lack the capacity to monitor and assess poverty. This is especially true in South Asian countries. For example, in the poverty

monitoring database of the World Bank, the sample coverage in South Asia is very low. Some countries do not have accurate poverty monitoring, nor scientific poverty assessment systems. They are not clear about their domestic poverty situation. Some do not even have a reliable set of data.

Third, the governments of these countries fall short of poverty reduction strategies and policy implementation. The absence of government has resulted in inadequate social cohesion when it comes to poverty reduction; it has also led to inadequate investment in cross-regional infrastructure and public services aimed at promoting poverty reduction. In addition, for most countries in sub-saharan Africa and South Asia, regional causes of poverty are prominent. Poverty alleviation in these countries or regions rely heavily on international organizations and NGOS. For example, the problem of child poverty in India is very serious. One out of every four poor people is under the age of 10.6 The main reason is that children are poorly educated, especially for those from lower castes in rural areas, whose education mainly relies on local NGOS.

Lack of pro-poor economic growth and social inclusiveness

Long-term, robust economic growth is the basis for poverty reduction, and pro-poor growth hinges on whether the income and other rights of the poor increase faster than those of the non-poor.7 Regionally, sub-saharan Africa has a long history of low and unstable economic development, with a GDP growth of just 1.3% in 2016. Low growth leads to a depressed job market, which is not conducive to poverty reduction. According to the International Labor Organization, the unemployment rate in North Africa was the highest in the world in 2015, reaching 12.1%, and the employment rate of young people aged 15 to 24 and women was even lower than the average. In sub-saharan Africa, more than 70% of workers are weakly

employed, with very unstable income and little access to social security.8

Agriculture, as a labor-intensive industry, is the most conducive to poverty reduction in developing countries. It is not only conducive to solving food security problems and eliminating hunger, but also to solving employment problems and promoting rural development. However, in the rural areas of sub-saharan Africa, agriculture is limited by climate, irrigation and technology, and the phenomenon of wide planting and low harvest is very common. The yield per unit area of most crops is at a low level. Under these conditions, even agriculture, which is considered the sector most conducive to poverty reduction, does not function well in sub-saharan Africa as a pro-poor element. In both South Asia and Latin America, the distribution of land is extremely unequal, and the poor have no access to arable land, which has formed a pattern of “anti-poor growth” in institutional arrangements.

The inclusiveness of social development measures whether a government has improved the conditions for vulnerable groups, such as the elderly, women, children, disabled people and immigrants, to participate in economic, social and cultural activities, so that they can have equal opportunities for development.9 Therefore, the poverty reduction goals of the UN’S 2030 Agenda for Sustainable Development are not simply targeted at income, but also at eliminating all forms of poverty and leaving no one behind, with an emphasis on equitable access to public services such as education and health to improve social inclusiveness. However, in those countries with a high poverty incidence, the inclusiveness of social development is seriously inadequate, and governments lack targeted policies in education, medical care, social security and other fields. The development ability and the anti-risk capacity of vulnerable groups is extremely weak. In sub-saharan Africa, the education, medical care and social security network is highly inadequate, and governments’ investment in these areas is severely

insufficient. In 2016, the completion rate of primary education was less than 70%, and health services were not popularized, resulting in a serious lack of inclusive social development.

China’s Experience in Poverty Reduction

Since it launched the reform and opening-up, China has made remarkable achievements in poverty reduction by lifting the largest number of people out of poverty in the world. This is closely related to a series of institutional designs and practices in line with China’s national conditions.

Exploring a three-pillar public policy framework and leading in eradication of extreme poverty

Over the past four decades of reform and opening-up, China has gradually formed a three-pillar institutional framework featuring pro-poor growth, inclusive development and multi-dimensional poverty alleviation, effectively promoting poverty reduction in this country.

The first pillar includes policies for pro-poor growth. After the launch of reform and opening-up, through the implementation of household land contract responsibility system and the establishment of price market for agricultural products, the close and effective integration of rural labor force and land was activated, the total factor productivity of agriculture was increased, and the first round of large-scale poverty reduction was achieved. Through globalization and industrialization in the 1990s, China’s use of foreign direct investment (FDI) and its domestic labor dividend, together with the combination of surplus rural labor and labor-intensive industries, improved the total factor productivity of the industrial sector and the nonagricultural employment of rural labor, which realized the second round of large-scale poverty reduction. After the global financial crisis erupted in 2008, China adopted proactive fiscal policies to combine surplus rural labor with infrastructure construction and urbanization. As a result, farmers’ wages as a proportion of total household income increased, which led to the third

round of large-scale poverty reduction. Since 2013, in the face of land and labor dividend shortages and other constraints, as well as such problems as the transformation and upgrading of the economy not being conducive to non-agricultural employment of the poor, China has put forward the strategy of targeted poverty alleviation in a timely manner, and achieved the fourth round of large-scale poverty reduction in a short period. After the four rounds of large-scale poverty eradication, China has put in place a framework for growth conducive to lifting the poor out of poverty.

The second pillar refers to policies for inclusive social development. China has two main policies for inclusive social development. First, through the popularization of compulsory education, poverty alleviation via education, expansion of public health services, and poverty reduction via health care, China has increased its investment in human capital, promoted more equitable development, and blocked the transmission of poverty between generations. Second, China has built a subsistence allowance system covering both urban and rural areas, provided cash assistance for the basic survival of the poor, and enhanced the security system for the elderly, disabled, orphans and other vulnerable groups. Since 2013, under the policy of nine-year compulsory education system, China has given priority to the implementation of the “9+3” poverty alleviation program in 832 povertystricken counties, covering a total of 12 years from primary school to senior high school. Some seriously poverty-stricken areas have even taken the lead in carrying out experiment of “3+9+3” poverty alleviation through education for a total of 15 years, including three years of preschool education. Since 2016, China’s National Health Commission (formerly National Health and Family Planning Commission) and other departments have issued guidelines on the implementation of poverty alleviation through health improvement, and organized group treatment of the poor suffering from serious and chronic diseases. China has implemented, in a targeted manner, programs to alleviate poverty through health care, ensuring that the poor have access to basic medical and health services, so as to prevent poverty caused by illness or illness causing a return to poverty. These provide a health guarantee

for the rural poor to shake off poverty. In 2017, the National Health and Family Planning Commission further proposed poverty alleviation through the “three batches” action plan, namely, treating a batch of the poor who have major diseases, signing, serving and managing a batch of the poor with chronic diseases, and providing a basic treatment guarantee for a batch of the poor who are seriously ill.

The third pillar is multi-dimensional development-oriented policies for poverty alleviation. China’s development-oriented poverty alleviation policies include three aspects. First, development-oriented poverty alleviation in areas with poor infrastructure and production conditions has improved the economic growth capacity of poor areas, increased incomes, and lifted poor people out of poverty. Second, with regard to the development of the poor population’s working and employment capacity, measures such as education, skills training, labor transfer and employment, and poverty alleviation through health care have been taken to increase the poor’s income, employment capacity, and human capital. Third, in view of the working and living environment of the poor, the government has ensured villages and households’ access to roads, water, electricity, fiber optics and other infrastructure and public services. China has established a multi-dimensional poverty reduction policy system, whether from the perspective of the inter-departmental setting of poverty reduction institutions within the government, or from the poverty reduction goal of “two no worries and three guarantees.”10

From 1981 to 2014, according to the World Bank’s extreme poverty standard of $1.9 per day, the proportion of China’s poor population dropped from 88.32% to 0.73%. More than 800 million people were lifted out of extreme poverty. To win the battle against poverty, China has adopted the strategy of targeted poverty alleviation and eradication. Through development-oriented and guarantee-based poverty alleviation, China has worked hard to achieve the goal of lifting all the poor by current standard

out of poverty by 2020. According to China’s current poverty standard, the number of rural residents living in poverty was reduced to 16.6 million in 2018,11 and poverty incidence was reduced to 1.7%. By the end of 2018, the number of poor people under the standard of $1.9 per day was statistically insignificant.

In addition, since China began development-oriented poverty alleviation in 1986, it has also established a subsistence allowance system covering both urban and rural poor. The average standard of subsistence allowance for rural residents was 4,833 yuan per person in 2018, which is well above the World Bank’s $1.90 threshold for extreme poverty. By the end of 2020, China’s rural poor will not achieve the goal of “two no worries and three guarantees.” Therefore, it is expected that China can fulfill the objective of eliminating extreme poverty and halve multi-dimensional poverty as set in the UN 2030 Agenda ahead of schedule by 2020.

The universal approach of “building roads before getting rich”

Reliable and effective infrastructure is a key factor in economic and social development, and it plays a significant role in pro-poor growth.12 “If you want to get rich, build roads first.” This is a widely accepted idea among Chinese people. Starting from the 8-7 National Poverty Reduction Program,13 the Chinese government has always prioritized infrastructure building in poor areas. Infrastructure construction, including the building of roads, dams and bridges, in the mountainous areas in central and western China, as well as old revolutionary bases and ethnic minority areas, has become a piece of basic experience for China in its efforts to eradicate extreme poverty.

Over the past four decades, central and local governments have increased investment in infrastructure and public services, including water, electricity, roads and the internet, which are together known as “four connects.” The coverage of the “four connects” has continually expanded, and educational, cultural and health infrastructure has been improved. By the end of 2017, 89.2% of rural households in poor areas had no difficulty in getting drinking water, nearly all rural villages had access to electricity, 99.9% of rural households in natural villages had access to highways, 99.8% had access to telephones, and 84.4% had access to broadband.14 In the battle against poverty, the scope of infrastructure development has been expanded to include roads, water, electricity, postal services and the internet, and digital infrastructure, in particular, has become an important part of the poverty eradication campaign.

Giving consistent priority to agriculture, rural affairs and farmers

China is a developing country with a large agricultural population. Agricultural and rural development is the main way to achieve stable employment and sound poverty reduction. China has long attached great importance to agriculture, rural affairs and farmers, and has accumulated rich experience in its time-honored history of agricultural development. Reform of the land system, transfer of rural labor, popularization of agricultural technology, cultivating of new agricultural operators, as well as the ongoing rural vitalization strategy, have all been tailored to different development stages and the prominent problems regarding agriculture, rural affairs and farmers. China has taken a problem-oriented approach, and adjusted policies to prioritize agriculture, rural affairs and farmers. From 2004 to 2019, for 16 consecutive years, the first document issued by the CPC Central Committee, commonly known as “No.1 Central Document,” has always been about agriculture, rural affairs and farmers. According to the National Bureau of Statistics, China’s per capita grain output rose from 319 kilograms in 1978 to

477.21 kilograms in 2017, with production and consumption of meat, milk and eggs steadily increasing. China has succeeded in lifting more than 800 million people out of hunger.

China’s Approaches in Global Poverty Governance

China achieves the goal of poverty reduction through the reform of domestic economic system, the development-oriented poverty reduction program, and the subsistence allowance system. Thanks to these efforts, China has not embarked on a path of poverty reduction relying on aid, although it has also received bilateral and multilateral assistance. As a responsible major country, China can explore ways to participate in global poverty governance through bilateral, multilateral and third-party cooperation, and contribute to the UN 2030 Agenda for Sustainable Development.

Strengthening government-led concept and capacity building

China has accumulated rich experience in strategic planning for poverty reduction, formulation of multi-dimensional and comprehensive poverty alleviation policies, and poverty monitoring and assessment, which can be used as public knowledge in the field of global sustainable development, and provide useful experience for China’s partners in poverty reduction. China’s enhanced efforts to promote South-south cooperation in poverty reduction is to complete, not to replace donor countries’ responsibilities and capabilities. Such cooperation can address some structural challenges to international development cooperation in poverty reduction. First, by helping partners strengthen their national strategic plans for poverty reduction and relevant policy systems based on their national conditions, China can make the official development assistance from international organizations and foreign governments more effective in serving the strategic goals of poverty reduction in developing countries. Second, by helping partners build capacity in poverty monitoring and assessment, China can ensure that government-led poverty reduction has a scientific and objective basis.

Promoting pro-poor growth through investment and trade

The precondition for a country to eliminate poverty is to realize the transformation of its economic growth pattern in a pro-poor direction. The global poverty governance upheld by China is not one-way aid, but “horizontal cooperation,” which emphasizes equality, mutual benefits and win-win cooperation with other developing countries. Such winwin cooperation should provide impetus for the transformation of partner countries’ economic growth toward a pro-poor pattern. Such a dynamic would not work by solely relying on the ODA provided by government finance. Therefore, more emphasis must be put on investment and trade cooperation to cultivate the drivers of economic growth in partner countries, especially in their private sector, so as to promote the construction of a growth environment conducive to the poor. Developing countries also hope to seek driving forces for joint development through cooperation mechanisms such as the Belt and Road Initiative. China’s achievements in poverty reduction are obvious to all, and its development experience is being sought after by many developing countries. Based on the above driving forces of supply and demand, it is an inevitable path for China to support poverty governance in other developing countries through deepening win-win cooperation under the Belt and Road Initiative.

Enhancing human capital cooperation and inclusive development

In the process of eradicating extreme poverty, China has always adhered to universal compulsory education and guaranteed basic medical and health services. This consistent emphasis on human development is also the fundamental experience of China’s development-oriented poverty alleviation. It is also the path that China should follow as it participates in global poverty governance. In order to improve the human capital of other developing countries, China’s foreign aid system covers a large number of training programs, including college scholarships for foreign

students studying in China, capacity-building programs for government officials, and Confucius Institute programs for local youth. In addition to strengthening human capital cooperation under existing bilateral and multilateral mechanisms for development cooperation, it is important for partner countries to take human capital demand as guidance, and strengthen cooperation in health care, basic education and vocational skills under the Belt and Road Initiative, so as to promote their inclusive development. It should be noted that with the establishment of the digital Belt and Road, it is necessary to make full use of the low marginal cost and rapid popularization of digital technology to strengthen cooperation on human capital investment in such fields as internet education and internet medical care.

Adhering to multi-dimensional poverty reduction and facilitating comprehensive development

The causes for poverty are complex and diverse, so the ideas for poverty reduction should be multi-dimensional as well. Since 1986, when China began to carry out development-oriented poverty reduction programs in an organized, planned and large-scale manner, it has adhered to a concept and path of multi-dimensional poverty alleviation. By formulating a package of policies, various government departments have been able to address the difficulties of poor people in transportation, electricity, drinking water, irrigation, education, health, housing and various other areas, thus reducing poverty in a comprehensive way. China’s comprehensive poverty reduction is valuable experience for developing countries in their efforts to eradicate poverty.

Reinforcing agricultural cooperation to consolidate foundation for eliminating extreme poverty

Extreme poverty is always associated with hunger. And to eliminate hunger, it is a must to strengthen the foundation of agriculture. From the perspective of food, if a country is to eliminate extreme poverty, it should

first have enough food, and second, the poor should have fair access to food. Therefore, to eliminate hunger, it is necessary not only to increase the agricultural production capacity of partner countries, but also to improve their food supply and distribution system. In countries where large-scale famine occurs, the causes include both insufficient food production and unfair food supply and distribution. China’s participation in global poverty governance not only gives full play to its advantages in agricultural science and technology, but also enables it to transfer experience in food supply and distribution through knowledge sharing and capacity building. In addition, attention needs to be paid to the integrated role of agricultural aid, investment and trade. It is important to encourage the private sector and NGOS to help developing countries achieve the goal of eradicating extreme poverty by 2030.

Conclusion

The United Nations has set a goal of eliminating all forms of extreme poverty around the world by 2030. As the developing country expected to first achieve this goal, China is able to participate more actively in global poverty governance. China’s philosophy and practices concerning poverty reduction cannot be duplicated, but they can be useful reference for other developing countries in their economic and social transformation and efforts to eradicate extreme poverty. With the Belt and Road Initiative as a platform, and through infrastructure connectivity, investment and trade facilitation, and cultural and people-to-people exchanges, China can share with partner countries its experience of successful poverty alleviation, including propoor growth, inclusive social development, and the multi-dimensional development-oriented approach, thus making new contributions to global poverty reduction.