At the beginning of December China’s Xi Jinping officially declared that China had eliminated poverty entirely, part of his priority program. Western financial pundits have praised the remarkable economic recovery of China following the severe lockdowns a year go to combat the coronavirus. Predictions that China would once again, as it did in 2008, lead the rest of the world, especially the EU and North America, out of deep recession are common. Yet behind the official Beijing statements there are indications that China’s decades of economic boom are coming into deep problems, far deeper than officially acknowledged. If true, the consequences for the rest of the world as well as for China could be severe.
Eliminating by Definition?
On December 1, 2020 Chinese Communist Party (CCP) General Secretary Xi Jinping announced that China had achieved the goal of “eradicating absolute poverty” and becoming a “moderately prosperous society” before the end of 2020. At the November G20 summit in Riyadh, Xi boasted that this was ten years ahead of the deadline set by the United Nations 2030 Agenda for Sustainable Development. Yet as even Chinese analysts point out, there are major questions to this achievement.
A binding target to eliminate absolute poverty by the end of 2020 was incorporated into China’s 13th Five Year Plan (2016-2020) in November 23, 2016. Now impressively, the goal is declared won, and just on time.
However on closer scrutiny, it is not as impressive. Most of China’s poverty population are rural migrant populations living in subsistence farming or by other means in the central and western parts of China far from the prosperous coastal provinces. A China National Bureau of Statistics 2016 report stated that in 2015 the poverty rate was 1.8 percent in China’s highly developed and largely urbanized eastern provinces; 6.2 percent in central China, and 10 percent in Western China.
Yet China does not use the standard of the World Bank defining poverty in an upper-middle-income country, namely for daily income of $5.50 per capita. It uses approximately $1.90 a day, the value for the world’s poorest countries. Second it talks about only rural poverty, ignoring a significant urban poor quotient. Were China to use the World Bank poverty definition, instead of 1.7% poverty, China would have 17% poverty,