CHINA'S NO POVERTY BY 2020...???

CHINA

Rural poverty

Ham-fisted handouts

China's biggest anti-poverty programme isn't working

From  "The Economist" - October 2015

 A CONCRETE track meanders past nurseries of pine saplings and sheep grazing on stubble, petering out at Dayinghan, the poorest, most remote village in the stony hills of central Shanxi, a northern province. Some of the villagers live in caves. A few chickens and ducks scratch for food amid the rocks. Zhang Erping's family is one of about 100 that remain, half the number of ten years ago. He and his wife eat meat a couple of times a month; they buy it at Gujiao, the nearest town, but even the L4 yuan (20 cents) bus fare is usually too much for the household to afford.

Mr Zhang used to drive there in a dilapidated three-wheel truck, hauling surplus crops to market. But the city government bans such vehicles for safety reasons, so he has two years' worth of potatoes and beans rotting away, unsellable. When he reaches 60 he will get a state pension of 1,200 yuan ($190) a year, but that is two years away and, anyway, is barely half the official poverty line. The city has promised him 350 yuan to heat his two-room home, and half-price medicines. But when his grandson fell ill recently, he had to borrow 1,000 yuan to pay the bills. Two massive debts are scrawled in pencil on a calendar hanging on the wall: 2,500 yuan and 6,400 yuan. "We've always been poor in this village," he says.

On October 16th President Xi Jinping said China would eradicate poverty by 2020. That would mean that 70m people cost of living in urban areas means that many city-dwellers above the poverty line are still living hand to mouth. Those still living below the line are almost entirely rural people who cannot work for reasons such as age, disability or because their villages are remote and inhospitable. Helping them will require more direct measures, not least giving cash.

The government mainly does this through its "subsistence guarantee" programme, often known by its Chinese shorthand, dibao. In principle, those whose income is below the minimum needed to keep them in adequate comfort (the level is decided by local governments) get a payment to bring them up to that level. The dibao programme began as a pilot scheme in cities in 1994, spread to the countryside in the mid 2000s and went nationwide after 2007. It has grown fast: the number of rural recipients more than trebled between 2006 and 2013; spending on it rose eightfold (see chart). Two-thirds of those who were below the poverty line on joining the scheme are now above it.

Most of China's poorest, however, are not in the programme. A study published by the World Bank in August found that in 2007-09 only 10% of those below the poverty line in the countryside got dibao payments. (Mr Zhang does not. get any) Around three-quarters of those who did get payments were above the line. Data are patchy, but it is clear that a lot of dibao spending goes awry.

The dibao system was set up by the central government but is implemented by local authorities which can limit the size of payouts. The study found that in rural areas local thresholds for receiving dibao payments ranged from 500 yuan to 3,000 yuan a year (ie, from above the national poverty line to far below it). Spending per head varied from almost nothing in some places to 4,000 yuan a year in others. Cost-of-living differences accounted for some of this variation but not all. In practice, richer villages tend to be more generous.

Widespread discretion breeds widespread corruption. In Dayinghan a 68-year-old neighbour of Mr Zhang says that only ten households in the village get dibao payments, all of them friends of the village's party chief. "It's completely unfair," he says. It is also common. In 2012 He Guoqiang, then one of China's highest-ranking leaders, said of village bosses: "They don't do their jobs... they don't really understand which households are in difficulty... and they give dibao benefits to relatives, friends or even themselves."

The programme is thus doing little to help lift more people above the poverty line. The World Bank study says each ten yuan spent on the dibao system narrowed the gap between a poor person's income and the local dibao threshold by only one yuan to 2.4 yuan, a miserable result.

Recently, matters have begun to improve. The government has set up a system of cross-checking applications with other official documents (such as medical records) to limit fraud. It is streamlining bureaucracy and creating a database of all those in the countryside below the poverty line. Local authorities used to bear most of the cost of the dibao system. Now the central government pays two-thirds. This should give it more clout in its attempts to improve the programme.

But more needs to be done. "We need to improve the quality of our data and really solve the issue of who we are supporting," says Liu Yongfu, a senior anti-poverty official in Beijing. The target of eliminating rural poverty by 2020 is unlikely to be met without further reform of dibao.

Back at Dayinghan, farmers are not optimistic. Asked about the idea of lifting everyone out of poverty within five years, Mr Zhang and his neighbour look at each other quizzically, and then smile. ■