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China’s poverty elimination boosts global confidence

ZHAO YUAN | 2020-08-07
(Chinese Social Sciences Today)

The IMF has forecast China to expand 1.0% for the full year, the only major economy expected to report growth in 2020. Photo: IMF


COVID-19 may push 40 million to 60 million people into extreme poverty in 2020, depending on estimations of the magnitude of the economic shock. The global extreme poverty rate could go up by 0.3–0.7 percentage points, reaching around 9%, the World Bank estimates. 

Rolf Langhammer, vice president of the Kiel Institute for the World Economy, said that China’s poverty reduction endeavor has improved the living standards of the poor by helping them increase their income. To sustain what the country has achieved so far, China needs to stick to economic structural reform, raise labor productivity and optimize domestic modes of production and consumption for the medium-to-long term. What’s more, China needs to increase the educational level and encourage less developed areas to improve their productivity. However, China’s poverty relief efforts are facing a tremendous challenge due to the pandemic. 
 
In an article titled Emerging Pathways Towards a Post-COVID-19 Reset and Recovery, the World Economic Forum suggested that governments should boost global economic recovery through three aspects: first, retooling economic policy, transforming tax architecture, and supporting labor market transitions and social protection; second, identifying new sources of economic growth, co-creating new frontier markets, and finding new paths for economic development and global convergence; third, aligning new targets for economic performance, embedding stakeholder capitalism in business and building consensus on a new set of national economic policy targets. 
 
Matteo Marchisio, country director and representative of China, Republic of Korea and DPRK for the International Fund for Agricultural Development, said that going forward, the focus of China’s poverty relief endeavors should be placed on the sustainability of the achievements so far, i.e. preventing people that have gotten out of poverty from going broke again. The vulnerable are more susceptible to the pandemic, thus more likely to sink into poverty during this period. Since the poor usually dwell in rural areas, China should invest more in countries and villages. Efforts should also be made to protect the vulnerable from other risks, such as food insecurity, malnutrition and climate change. According to the World Bank, 33 million additional people are estimated to live in extreme poverty. Those who live in extreme poverty find it difficult to access education, healthcare, basic utilities and safe drinking water, since they usually live in disadvantaged places, are of an inferior socioeconomic status, or suffer from gender or racial discrimination.   
 
Alicia Garcia-Herrero, senior fellow at the European think tank Bruegel, held that poverty elimination has been an important task of the Chinese government for a long time, during which the population of the rural poor has dropped from 770 million in 1978 to 5.51 million in 2019. China has obtained great success in improving rural residents’ standard of living. To consolidate what it has achieved, China should pursue targeted poverty alleviation and engage more of the market and society in this common endeavor. 
 
The International Monetary Fund estimated that China’s economy will be the only major economy that is able to achieve positive growth in 2020. Chris Rowley, visiting fellow at the Institute of Asia and Pacific Studies at Nottingham University, said that finishing the building of a moderately prosperous society in all respects in 2020 is an important goal for China. High-quality poverty reduction requires China to carry out economic structural reform, boost high-end manufacturing and the service industry, and transit from an investment-driven growth model to a consumption-driven growth model. China’s economy has great potential and will maintain good momentum for a long time to come. However, it also faces the uncertainty in the global supply chain. That’s why China needs to help protect the global trade system. 

 

edited by NIU XIAOQIAN