Last year, China saw an increase of 800,000 poverty population (with per capita annual income under 637 yuan, US$1=8.28 yuan), the first instance in the country's poverty alleviation history, according to Liu Jian, deputy director of the Aid-the-poor Development Office of the State Council.

Liu made the remark at a seminar on brain support to poverty-stricken areas. Despite serious natural calamities and SARS last year, he said, important progress had been made in the country's poverty relieving work. The per capita net income for farmers in 592 key counties increased by 6 percent, 1.7 percentage higher than the growth of national average. The population of low income (per capita annual income lower than 882 yuan) decreased by 1.28 million. Progress had also been made in infrastructure construction of poor areas.

China still faces severe situation in poverty alleviation

The country is still facing a severe poverty-alleviation situation, Liu stressed, which is mainly expressed in the following facts. First, there is a noticeable slowdown in providing adequate food and clothing to poor people. From 1994 to the end of the last century, China solved the problem of food and clothing for an average of more than 6 million rural people each year, but during the first two years of the new century, the figure shrunk to less than 2 million. Last year even saw the first ever rebound in the history. The situation deserves particular attention in the provinces of Henan, Anhui, Shaanxi and Heilongjiang due to natural calamities. In Sichuan more than 2 million fell into poverty again. Second, the income gap between poverty population and other farmers further widened. The upper limit for income of poverty population in which adequate food and clothing have not been well solved was 637 yuan in 2003, while the per capita net income for farmers nationwide was 2,622 yuan, or 1:4.12, showing a large gap compared with 1:2.45 in 1992. This indicates that poverty-stricken population has fallen into a more disadvantageous position in social development.

How to view the rebound of poverty population

It seems to be a piece of news disappointed that last year saw China's poverty population increase by 800,000 instead of decrease. The news is quite thought provoking should we approach it in a more rational way.

Currently China still has nearly 30 million people living in a plight of absolute poverty, not accounting for another 60 million who has not shaken off poverty completely and would easily return to poverty in case of natural calamities or manmade misfortunes.

To deal with it fairly, the Chinese government has made tremendous efforts in aiding the poor and achieved considerable results. But the government still failed to fulfill the task as set in 1994 to basically solve the food and clothing of poor population by 2000. In fact, poverty alleviation is a worldwide problem, and the Chinese government has been doing a fairly good job in this regard as compared to other countries in the third world and has won many praises from international organizations.

Then where on earth lies the root-cause of the problem?

Before answer the question attention must be paid to the following facts. First, like investment in other areas, funds put into poverty alleviation also observe the law of "decrease of marginal effectiveness", according to which, work becomes harder when it enters the final stage. Just because of this, a part of poverty population can hardly be "eliminated" even in developed countries. There always exists a margin in economics, in which the effectiveness of aiding the poor is a negative; for people within the margin we can only keep them at a living standard of minimum dignity through providing year-round relief and particularly normal schooling to their children.

Secondly, part of poor people live in areas of extremely harsh conditions. Upon them the government support turned out low effective in both direct economic returns and social returns (environmental protection). According to researches by experts on agriculture history, the entry of "new continent crops" (maize and potato) a few centuries ago enabled a large population to live in cold and damp mountain areas. They destroyed forest to make rooms for crops to eke out a living. For these people, more funds mean bigger damage to biological environment.

Thirdly, due to religious and cultural reasons, there is always a part of population who rejects the lifestyle of modern civilization during a certain period, which is seen in many countries (such as a part of conservative Amish in the United States). Helping them to shake off poverty is also difficult. Generally their offspring will finally accept modern civilization, but only in a slower pace. If the government is impatient for success, the result may be otherwise than what is wished for.

Fourth, the efficiency of government's poverty fund operation, and this is perhaps the most important point. Of the total amount of funds allocated for helping the poor, there is always a small part getting lost when passing to lower level authorities. The efficiency is even lower given corruption and difficulty in supervision. A report from auditing department showed that from 1997 to the first half of 1999, the central and local governments had put a total of 48.8 billion yuan into 592 state-defined poor counties, while 4.343 billion yuan was later found out be embezzled, transferred or used for other purposes.

In recent years funds for poverty alleviation from the state, NGOs and international institutions exceeded 30 billion yuan annually, if they are directly put into the hands of 30 million poor people, then every one would got 1,000 yuan annually, a sum much higher than the poverty line.

The above-mentioned facts press us to reconsider our guiding principles, manner and efficiency in aiding the poor. First of all, we should not count on "poverty reduction through development projects" to lift all people out of poverty. There always exists in a society a small part of population under absolute poverty, they need government aid and their children particularly need schooling. Secondly, the government should relocate people living in areas of extremely harsh natural conditions. Thirdly, for poverty caused by religious and cultural reasons, the government should remain patient and help infrastructure construction open the economy there. Fourthly, the most important is to raise the efficiency in using poverty relieving funds and avoid money-wasting projects.

(People's Daily July 21, 2004)