China’s war on poverty far from over despite tunes of ‘victory’

President Xi Jinping stood on the podium in the Great Hall of the People in Beijing and announced a “complete victory” in eradicating rural poverty in China.

Since his initiative was launched in 2012, nearly 100 million of the country’s most vulnerable citizens have seen their living standards improved.

“As long as we adhere to the Party’s leadership, we can surely defeat any difficulties on our march forward,” Xi said on Thursday ahead of the birthday bash for the 100th anniversary of the ruling Communist Party later this year.

For Xi, it was a moment of intense satisfaction to see the fruition of his signature policy. But a closer look illustrates the challenges ahead after stripping away the veneer of hard numbers.

The facts:

• Since 2012, 98.99 million rural residents have been lifted out of poverty, Xinhua News Agency reported.
• More than 830 counties and 128,000 villages have been removed from the poverty list.
• China has lifted 770 million rural residents out of poverty since the country opened up more than 40 years ago.
• Beijing defines extreme rural poverty as an annual per capita income of less than 4,000 yuan (US$620).
• That works out at $1.69 a day compared to the World Bank’s global threshold of $1.90 a day.
• The wealth gap is also widening.
• The top 1% of households now own roughly one-third of China’s wealth.
• The bottom 25% had only 1%, according to a survey by Peking University as reported by The Wall Street Journal.

What was said: “The CCP’s leadership and China’s socialist system are the fundamental guarantees against risks, challenges, and difficulties. China has cultivated the spirit of poverty alleviation, which is an amalgamation of patriotism, collectivism, and socialism. [But] shaking off poverty is not the finish line. [It is] the starting point of a new life and new endeavor,” Xi said.

Problems ahead: “One major obstacle to raising living standards is the sheer size of the low-income population: 600 million of China’s 1.4 billion people have a per person income of only about $150 a month, according to official data. Although the party has achieved its poverty alleviation target – a very low bar – it now faces the harder task of shrinking the income gap between urban and rural China, and between the coast and hinterland,” Ann Scott Tyson wrote in the Christian Science Monitor.

Delve deeper: The days of double-digit economic growth are over for China. Following the fallout from the Covid-19 pandemic, unemployment and stagnating wages have become priorities for the CCP. The knock-on effect has taken its toll on small- and medium-sized businesses, a crucial driver of jobs. In October, fresh funding measures were rolled out to ease the pain of SMEs. The private sector contributes roughly 60% of gross domestic product.

What that means: “You basically have two different Chinas and two different economies operating. So when do you begin to take care of the people who have been left behind?” Elizabeth Economy, the author of The Third Revolution: Xi Jinping and the New Chinese State, said.

China Factor comment: Since the ruling Communist Party lack a mandate from the ballot box, economic growth is essential for the CCP to maintain its grip on power. Lifting living standards in the poorer provinces is still a work in progress. China is also among the world’s most unequal societies, according to the International Monetary Fund as reported by The Wall Street Journal. Closing that gap, while modernizing the healthcare system along with “rural revitalization,” will be a herculean task for the world’s second-largest economy. Rising debt problems at home and deteriorating relations abroad add to a toxic mix.