BOFIT Viikkokatsaus / BOFIT Weekly 2018/21

The World Bank defines the international poverty threshold as disposable income of USD 1.90 a day (PPP-adjusted). Under that definition, 88 % of the Chinese population lived in below the poverty line in the early 1980s. That ratio had fallen to just 2 % by 2013, when the number of persons living in poverty was just 25 million.

The global Multidimensional Poverty Index (MPI), which was developed at Oxford University and has been embraced by the UN, assesses poverty more broadly in such terms as years of education, nutrition, child mortality, access to necessities, healthcare and living standards. Under the MPI, 12.5 % of Chinese were poor in 2002, but just 4 % (56 million people) in 2014. Gains in poverty reduction mainly reflect better access to education and improvements in hygiene and public health.

China's official national poverty line is an annual income of 2,300 yuan a year (about USD 350 a year). Under this poverty definition, there were roughly 56 million impoverished Chinese in 2015. The government notes, however, that the number has fallen steadily by about 10 million people a year. Last year, the number of persons living in poverty was about 30 million.

President Xi Jinping would like to see all extreme poverty eliminated by 2020. The elimination of poverty is one of three pillars in the current five-year plan. The other main themes are reducing pollution and financial risks to the economy. The government also wants to relocate 100 million rural inhabitants to cities by 2020 and another 150 million by 2026. This goal integrates the most difficult phase in elimination of poverty, which involves bringing those in extremely rural areas into economic life and modern living standards. People are moved to cities or surround areas, or into newly built villages. Poverty reduction and urbanisation reinforce consumption and economic growth.