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Facilitating poverty alleviation through industrial development

WU BIBO | 2020-10-28
(Chinese Social Sciences Today)

This is the photovoltaic power station built in Longxi township of Changzhi city, Shanxi Province. Solar energy-based poverty reduction program released by the government tries to provide stable income for the impoverished through electricity sales. Photo: XINHUA 

Poverty is a global problem. Eradicating poverty is a task that faces all of mankind. Since the founding of the People's Republic of China in 1949, China's poverty reduction work has made unprecedented achievements, demonstrating institutional advantages and the effectiveness of policies. Since the 18th CPC National Congress in 2012, the socio-economic development of all regions has continued, lifting more than ten million people out of poverty each year. 
As China aims to eradicate absolute poverty in 2020, the focus of China's poverty alleviation work will shift from absolute poverty to "relative poverty." Chinese President Xi Jinping put forward a series of new theories around innovative thinking and targeted concepts in line with the development of poverty alleviation in the new era, pointing poverty alleviation work in a new direction. 
Poverty alleviation through industries began in the 1980s. In the 1990s, "development-oriented poverty alleviation" was proposed, which promotes self-accumulation and cultivation of impoverished people's endogenous capacity through the market mechanism based on the resource endowments of poor areas. Afterwards, poverty alleviation through industries played a leading and fundamental role in the "Five-Pronged Poverty Alleviation Measures" of targeted poverty alleviation (developing production, relocation, ecological compensation, development of education, and securing basic needs through social security). In 2019, China's No.1 Central Document clearly designed a plan to develop long-term poverty alleviation industries. The 2020 Government Work Report clearly states that the goal is to "resolutely win the battle against poverty" and again emphasizes the importance of poverty alleviation through industries. The new development situation has given poverty alleviation industries a special mission and higher requirements, and brought new opportunities and challenges to industries assisting in poverty alleviation. 
Nurturing internal drive 
Long-term poverty alleviation efforts are facing the challenge of insufficient endogenous drive. Poverty-stricken regions have unsatisfactory resource endowments, a shortage of factors of production, weak industrial basis and lagging rural reform. When regions are severely hollowing, aging, and impoverished, income growth which relies on working in urban areas is not sustainable. In the new phase after 2020 that targets relative poverty, cultivation of the internal capacity of poor areas becomes a priority and effectively combines a "blood transfusion" with "hemopoiesis" in poverty alleviation policies. 
Whether poverty alleviation through industries could be sustainable is a fundamental question. Industrial choices, transformation and upgrades, as well as energy shifts should follow the actual situation of industrial development rules and factor endowments. Local social cultures and poor people's individual employment choices should be respected. With the scientific guidance of the 14th Five-Year Plan, the basic conditions for poverty alleviation industries in poor regions will be improved. It is necessary to focus on infrastructure, public services and the business environment. Evaluation systems measuring risks of vulnerability and a long-term mechanism that prevents the return to poverty should be established. Also, cultivating new economic growth points in poor regions is necessary. In addition, we should incorporate impoverished people into new business entities or the poverty-alleviation industrial chain, and let them participate in the process of developing poverty-alleviation industries, designing a fair and reasonable mechanism that integrates the interests of multiple stakeholders. 
At the same time, homogeneous competition, excess productivity, low added-value products and the difficulty in maintaining industrial competitiveness, which are attributed to large-scale industrial support, all deserve special attention. Balanced benefits will be achieved if partners reach a reasonable interest distribution ratio through contracts. Institutional methods can also help achieve a win-win situation between cooperative entities. 
Higher requirements 
The condition of poverty becomes more diverse and complex as it is transitioning from absolute poverty to relative poverty. Obvious features of this type of poverty include vulnerability, multidimensional poverty, ethnic poverty and unbalanced development. It is essential to change from urban-directed to agricultural and rural-directed poverty reduction. The core of poverty elimination through industries is to develop industries, which is also one of the major tasks for the construction of pilot zones for urban-rural integrated development. 
In summary, poverty alleviation through industries mainly has the following tasks. One is to directly promote the growth of agricultural operational income. Poverty-alleviation industries could provide farmers with low-cost means of production and increase the added value for agricultural products in poor regions. Signing product purchase orders with farmers could help raise the sales volume of agricultural products. Featured cash crops have a significant effect on increasing household consumption and decreasing the poverty rate in rural areas. The second task is to increase salary income through employment income. There is a need to adjust the economic structure in poor regions and enrich farmers' livelihood choices. In addition, it is necessary to reconstruct the institutional design of poverty identification and targeting, the path selection of poverty reduction, and innovation on mechanisms. Strengthening the demand for workers is also needed to absorb more labor from poor families. The third task is to promote assets income to increase transfer income. Industrial projects can undertake part of the role of making up the income gap which could provide the poor with lasting and stable income. The labor intensity of the industry affects its poverty reduction result. 
Sustainable developments 
Over a long period, all levels of financial departments have taken major responsibilities for the process of poverty alleviation. Poverty conditions have been changing, and it is more difficult for farmers to find jobs in urban areas and increase their income, so the provision of public welfare jobs has shown limited effect on improving the overall livelihoods of the poor. This demonstrates the need to establish a sustainable development mechanism for poverty alleviation and farmers' income growth, and must rely on the revitalization of rural industries, fully realizing agricultural and rural modernization. 
With the social and economic progress, agriculture has gradually become a multi-functional and permanent industry. Restrained by natural endowments, agricultural progress alone is insufficient to provide development momentum. Therefore, it is urgent to nurture new agricultural production organizations and new energy companies using photovoltaics and wind electricity to enhance land production efficiency. Based on resource endowments and featured industry support, the support of finance and talent can be strengthened, poverty alleviation factors can be gathered, and all this will extend relevant industrial chains and promote industrial integration. 
Moreover, it is necessary to form a new impetus for continuous poverty reduction through new technologies, new business formats, new industries, and new models as the core. The practice of technological entrepreneurship formed by the integration of agriculture and industry could activate essential resources of ethnic minorities in rural areas. The combination of local resources, cultural resources, and industrial evolution requires effective support from policies. Therefore, the intersection between a promising government and an effective market must be identified, to establish a guarantee mechanism for the regular institutional system. 
Optimizing the practice model 
The level of economic development in poverty-stricken areas has continued to improve, and poverty alleviation through industries has shown remarkable development. However, the low quality of poverty alleviation and the difficulty in implementing supportive policies requires the construction of a new model of poverty alleviation, through industries, based on new trends in poverty alleviation. 
Given different resource endowments in different regions, we should select suitable featured industries based on actual conditions. Considering resource endowments, geographic location, ecological environments and causes of poverty, we must adapt to develop suitable industries, such as sightseeing agriculture, ecological agriculture, pastoral complexes, and deep processing of agricultural and sideline products. Poverty alleviation industries should take into account both economic and social benefits. 
The differentiated poverty alleviation needs of poor people are important. Only when poor households and poverty alleviation industries are effectively matched can the poverty reduction effects be fully realized. The poor should be divided into poor households with labor capacity, poor households with factors of production, and poor households with knowledge and technology. We must develop industries based on local conditions and considering different types of poverty-stricken population and resource endowments, and implement targeted poverty alleviation. 
On the whole, with the fundamental transformation of China's poverty situation, the work to resolve relative poverty is more demanding, the causes are more complex and it is a more dynamic situation. If the goal is to have poor regions self-develop hemopoietic systems, we should pay more attention to enhancing the poverty alleviation effects through industrial development. With distinct industrial foundations, producing activities, and product attributes, the model of poverty alleviation through industries has vivid regional features. At present, the information age is accelerating the transformation and innovation of poverty alleviation through industries. 
Wu Bibo is from the College of Finance and Taxation at Inner Mongolia University of Finance and Economics.