China

China will 'eradicate poverty' very soon

By Ariel Tung (China Daily)
Updated: 2010-09-24 11:24

NEW YORK - China, as well as other East Asian developing nations, is certain to achieve the poverty reduction targets underlined in the Millennium Development Goals (MDGs) by a wide margin, experts have said.

China will eradicate poverty in the next 10 to 15 years, said Uri Dadush, senior associate and director at Carnegie Endowment for International Peace's International Economics Program.

India will, however, take much longer to lift the country's poor, he said.

Howard Friedman, an adjunct professor at Columbia University, said the poverty reduction target, known as MDG1, was actually a "less ambitious" goal as it was set 10 years into the MDGs program in 2000. He cited World Bank data to point out that poverty in China fell from 80 to 15 percent between 1981 and 2005.

China has grown so quickly over the past few decades that its poverty rate is expected to fall to around 5 percent by 2015, according to the "China's progress towards the Millennium Development Goals 2005" report extracted from the United Nations Development Group website.

Experts, however, have expressed concern about the rising social inequality in China, which they believe will challenge its long-term growth story.

"Inequality will be a problem for China not just into 2015 but for many decades," said Friedman. "In China, there is a huge disparity of income and quality of health and living standards between its rural and urban areas."

Yukon Huang, senior associate at Carnegie Endowment for International Peace's Asia Program and former World Bank director for China, said urban income was about three times as much as the rural income in China.

Moreover, the wide gap between incomes in China's coastal cities and inland cities has been increasing in the last three decades. Huang however called it "good inequality" as it represented very rapid growth in China.

"Typically, its coastal cities grow very fast. Urban income has grown by 10 percent over the last several decades. On the other hand, rural income has increased by 4 to 5 percent over the same period, representing one of the highest growths in the world," Huang said. "But, because urban income has grown much faster than rural income in China, its inequality problem has increased."

Despite its "uneven development", China has made more spectacular progress in poverty reduction than any other country, and the Chinese government is now focusing more on the development of its poorer inland and western regions, said Dadush.

One powerful way to tackle income inequality, according to Huang, is to support workers and their families in their quest to migrate from rural areas.

"Making it easier for migrant workers and their families will improve inequality considerably. Also, when more people leave rural areas, there will be more land resources for those who stay behind," explained Huang.

Friedman said China had responded to the economic crisis very well by directing funds to those who needed it most, whereas the US had not.

"Actions like that make its citizens optimistic that the government will help those who have the most needs," Friedman said. "The government is also making efforts to build infrastructure and invest in education and health in the western provinces, creating opportunities for and allowing people there to have a better life."

Although China's aging population is a worrying factor, Huang said a completely different policy would help propel the nation's future growth.

"The focus has been on providing jobs and reducing unemployment. The major challenge is to move away from low-level jobs to high-level jobs. It will be rewarding for the increasingly educated Chinese population," Huang said.

"Also, the government's priority has been on rapid growth and to increase exports, which has generated labor-intensive industries that fetch low wages. In the near future, the focus should be on the quality and not quantity of jobs."

Gender inequality is another big concern in China, according to Friedman. "There are at least 20 million more boys than girls in China. In future, you will see women migrating from poorer neighboring countries to China for marriages as well as millions of poorer Chinese men who desire spouses forced to remain unmarried. Large numbers of poor men without marital prospects will pose a problem to any country's economic and social well-being," Friedman said.

Despite these challenges, China has great potential for strong growth as "it has all the elements," Dadush said, citing the country's huge savings, large human capital, and the ability to adapt to technology.

"There is no reason why China cannot develop very strong global businesses, which it is beginning to do. The size of its market is a huge potential," Dadush said.

Dadush believes China's growth can also help other developing nations in reducing poverty.

"China's import of raw materials like oil, wheat and grain can help these poorer nations. Secondly, China's investment can help them develop their natural resources, if done the right way, like how it is being done in parts of Africa. I think China can help these African countries develop their natural resources," said Dadush. "At the rate at which China is going, given its ready resources, it can afford to put some money into foreign aid. I think by working through the World Bank, UN and regional development banks, and in collaboration with other donors, it can make a great impact."

China Daily