Poverty and inequality in China post 1978; does a rising tide lift all boats?

26 Feb

Following the economic reforms of 1978, the alleviation of poverty in China has been staggering; by 2004, it was estimated that there were 224 million less individuals suffering from poverty than before the economic reforms took place (Lecture 5 slides).

Whilst it is clear that embracing capitalist policies has greatly benefited China, has the topic of poverty been ‘swept under the carpet’ since?

The famous four character policy of 1978, which heralded the beginning of China opening up itself to the ‘barbarians of the outside world’, was promulgated to, arguably, remedy some of Chairman Mao’s mistakes whilst in power. Its success clear, the notion of poverty in China has seemed to have taken somewhat of a back seat in global affairs presently; whilst there has been a massive alleviation of poverty, brought about in part by a rise in living standards, China’s accepted “Official poverty line” is lower than that of the standard set by the World Trade Organisation (WTO). By Chinese standards, only 3.2% of its populace are considered to live in poverty; a stark contrast to the 12.5% figure generated by following the WTO’s “Official poverty line” (Lecture 5 slides). Why is there this difference? This leads us to question China’s motivation in setting the level lower. It seems as though the Chinese government is trying to almost ‘cover up’ its poverty levels, in an attempt to remove some of the stigma associated with being a developing country.

Whether this is the case, it is obvious that China is keen to both establish and maintain its position on the world showcase; but by covering up it’s true development, it risks ‘kidding itself’ as a nation. Inequality has grown rapidly, with the major cities and the original Special Economic Zones (SEZ) prospering at the expense of other rural areas, which have yet to catch up. Urban accelerated growth has meant that China’s levels of inequality nationwide are vast; it will be interesting to see if this imbalance has a knock-on effect to China’s future development, and whether it would be in China’s interest to tackle the problem sooner rather than later. 

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