Fact Check: China Didn’t Actually Lift 100 Million Out of Poverty Since 2014

Wang Fuman, also known as "Frost Boy," walks on the road in Ludian in China's southwestern Yunnan Province on Jan. 12, 2018. (AFP/Getty Images)

Commentary

China’s dictator, Xi Jinping, loves to brag about how the Chinese Communist Party (CCP) lifted 100 million people out of poverty since 2012, when he took office. The CCP in general boasts of lifting 800 million from poverty since 1990. It typically pluses up the numbers, conveniently leaves out the tens of millions who died of starvation from disastrous agricultural collectivization in the 1950s, and never mentions its lackluster economic performance relative to Japan, South Korea, and Taiwan.

A new study covered by the Financial Times on June 8 details how Xi’s “precise targeting” poverty eradication campaign cooks the books by ignoring the over 63 percent of China’s population that live in cities, those who fell into poverty after cooking the books started, and its much lower poverty line than other countries at a similar level of development. The study, by former U.N. senior economist in China Bill Bikales, provides a closer look at the data, and its elisions.

When considering the above, it is evident that the CCP impeded poverty reduction in China, rather than actually helped. What really decreased poverty in China was the opening to the West, and the introduction of market principles into its economy by Deng Xiaoping. That was a withdrawal of the CCP from China’s economy, rather than its positive policy. Things improved in China when the CCP got out of the way.

The Economist’s David Rennie was quoted by the BBC in February as saying, “Chinese people, by working extremely hard, lifted themselves out of poverty—in part because some of the stupidest economic policies ever created, by Chairman Mao, were abandoned in favour of versions of capitalism.”

The new study, funded by the Swiss Agency for Development and Cooperation, is considerably more polite, if not obsequious. But it nevertheless lands some punches that will be unwelcome in Beijing. When criticizing a dictator to achieve reform, even from afar, it seems the best strategy is a compliment sandwich.

The CCP’s claim to have eradicated poverty in China is central to the threads of legitimacy to which it clings. In late 2020, the party claimed that extreme poverty had been eradicated, which would be an impressive feat given negative economic growth in the first half year due to pandemic shutdowns. The FT said that “hitting the [poverty] target on schedule delivered a propaganda coup for President Xi Jinping ahead of celebrations of the centenary of the party’s founding in July this year.”

An April white paper published by Beijing falsely described Xi’s approach to poverty eradication as “eliminating overall and extreme poverty for the first time in history of thousands of years.” Beijing even tries to hold itself up as a model for other countries to follow on poverty eradication.

But the Communist claims and pomposity are built upon lies, bias, and half-truths.

As explained by Bikales, Xi’s approach was to identify only the rural, not urban, poor by registering almost 90 million of them between 2014 and 2016 in a national database. Then, the CCP claims to have brought those registered above the poverty line by late 2020. Even after the pandemic started, China’s anti-poverty work focused on the remaining 5.5 million registered rural poor, rather than all poor in the country, including the unregistered rural poor.

One way to reduce rural poverty is to force the rural poor into apartment complexes in the city, which was apparently one of the CCP’s tactics. The 13th five-year economic plan announced in 2015 included a binding target for the relocation of 10 million rural poor. “This was the epitome of a government policy-led approach—really a campaign-style approach—to poverty reduction, with massive mobilization of financial and human resources and strong and repeated exhortations from the country’s leader,” according to Bikales. “Every year, a very precise figure regarding the number of remaining poor counties, villages and households was released. By November 2020, the government announced all targets had been achieved and extreme income poverty in China according to the current national definition had been eliminated.”

People eat dinner outside their rooms on a street in a migrant village on the outskirts of Beijing on Aug. 17, 2017. (Nicolas Asfouri/AFP/Getty Images)

Bikales notes that “there is a conspicuous lack of detailed data that would allow an outside observer to confirm or reject the accuracy of this assertion” that China brought almost 90 million people out of rural poverty. He also observes that poverty is dynamic and urban as well as rural, so identifying those in rural poverty only, and tracking their rise out of poverty, does not account for the urban poor, or the rural non-poor who fell into poverty since the registration of the rural poor.

“The notion that, by identifying all poor people at any one point in time and then, over seven years, lifting them out of poverty, the government has eliminated poverty altogether reflects a static view of poverty,” writes Bikales. “This view of poverty is inconsistent with a repeatedly, globally observed feature: poverty is dynamic; households rise out of and fall into poverty constantly.”

China’s poverty eradication under Xi Jinping thus smacks of trying to hit a bureaucratic target for propaganda purposes, rather than addressing the underlying issues of China’s poverty in an even-handed manner. That requires real reform.

“Complete elimination of the hukou system [that bans rural-to-urban migration] is a necessary and long overdue step toward addressing the causes of poverty in China,” according to Bikales. He also notes that China’s regressive taxation system undermines effective future poverty reduction.

The CCP set the bar low. Its self-determined poverty line since 2010 has been $2.30 per day, adjusted for inflation. But that is far below the World Bank poverty line of $5.50 for upper-middle-income countries, like China. By that latter metric, about one-fourth of China’s population still lives in poverty. This is worse than Brazil.

But the simple divide between the poor on one side of $2.30 or $5.50 per day, and the non-poor on the other, is itself misleading, as someone in China could make a measly $5.51 per day and still be considered above both poverty lines. A better understanding of poverty in China is achieved by comparing its GDP per capita and income inequality measures to its East Asian peers, namely Japan, South Korea, and Taiwan.

China’s GDP per capita, accounting for differences in purchasing power, is far lower than in Japan and South Korea. China’s communistic distribution of wealth doesn’t make up the difference for the poor. In fact, its concentration of wealth is worse than in these other two East Asian countries, according to World Bank figures.

A woman picks tea leaves at the Moriuchi Tea Farm in Shizuoka, Japan, on May 1, 2014 (Chris McGrath/Getty Images)

Likely due to China’s undue political influence on the World Bank, the international lender does not provide similar data on Taiwan, but that democratic country’s GDP per capita (PPP) was about $50,500 in 2017, and its income inequality score was 33.9 in 2019. Taiwan is far wealthier, and with a more egalitarian distribution of wealth, than China, whose inequality score in 2016 was 38.5. China’s GDP PPP per capita in 2019 was just $16,804, about a third of Taiwan’s figure.

No wonder China doesn’t want Taiwan recognized as an independent country. The little island democracy beats China hands down, even on the metrics of poverty eradication and equality, upon which communists pride themselves. How embarrassing, for the CCP.

Developing countries looking for an example of how to grow out of poverty and into relatively egalitarian, free, and prosperous societies, should look to Japan, South Korea, and Taiwan for inspiration, not to Communist China.

Anders Corr has a bachelor’s/master’s in political science from Yale University (2001) and a doctorate in government from Harvard University (2008). He is a principal at Corr Analytics Inc., publisher of the Journal of Political Risk, and has conducted extensive research in North America, Europe, and Asia. He authored “The Concentration of Power” (forthcoming in 2021) and “No Trespassing,” and edited “Great Powers, Grand Strategies.”

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.