1. Analysis and Countermeasures to the Rural Extreme Poor in China Zhang Lei November 7, 2005 Beijing Note ： Findings displayed in this PPT was developed in May,2004 was developed in May,2004

2. Ⅰ Concept of the Poor 1.Concept of Poverty

3. Poverty of the Human Society Property （ Ownership ） Core of Poverty Development Subsistence Pleasure Wealth Demand Property The Private Property System should be discarded Consumption

4. Understanding of Poverty Poverty is an indefinite and dynamic concept which is measured by different standards. In theory, poverty or poverty reduction is a transient and permanent topic.

5. Ⅱ Who are the poor? 1 、 Subsistence standard adopted by the Chinese government ： The poor who have no sufficient food and shelter

6. Figures from surveys on 67 thousand rural households by NBS according to the composition of food (85%) and non- food (15%) that sustain basic livelihoods. Unit ： Yuan 、 10million

7. 2 、 Poverty Standard in Practice ： Low-income poverty standard

8. NBS proposed to peg the low-income poverty standard at 865 yuan after conducting the assessment and research in 2000 on the actual consumption of the poor under the subsistent poverty line. Unit ： Yuan 、 10million

9. 3 、 Commonly-used poverty standard ： One dollar a day

10. As calculated by the World Bank according to the purchasing power parity in 1985 on the basis of statistics from over 30 countries in the 1980s, the extreme poverty line shall be the per capita annual income lower than 370 US dollars or an equivalence of one dollar a day per person. The global poor with their income lower than this standard numbers about 1.1 billion and those in China numbers 120 million, 10% of the world total.

11. 4 、 Meet the subsistence standard in a stable way

12. The dynamic analysis by the NBS on poverty data shows ： Fluctuation around the subsistence line keeps at 70% ； Fluctuation around the low-income line keeps at 60% ； The fluctuation shall not be diminished unless the farmers ’ annual income reaches 1300 RMB yuan. And above this level, the ratio between food and non-food expenditure will be 4:6 and the fluctuation will be within the range of 10%. Those below this line number 160 million.

13. The extreme poor is the group whose annual income is lower than the first standard, namely, the official standard. The low-income population who risk returning to poverty is the group whose income is lower than the second standard.

14. Ⅱ Background 1.Poverty reduction was slowing down even with a rebound of poor number in 2003 Tendency of Changes

15. Yearly Fluctuation of Poor Population Poverty Reduction Pace Slowed ： Annual decrease of the poor

16. 2.Perspectives of Popularity Among the remaining 29 million poor (per capita income lower than 637 yuan in 2003), approximately 20 million are bereft of laboring ability who shall need poverty reduction assistance. It required only 2.7 billion – 3 billion RMB yuan annually from government finance to address this group of poor.

17. 3.The current poverty reduction assessment system is defected that it can hardly reflect the reality of the poor Sample surveys ： reflect the magnitude of poor with annual income lower than the subsistence line ； Can not reflect the yearly changes of the number of poor

18. Data from different agencies supported the perspective that there existed 20 million poor who have lost their laboring ability. This point of view was catching on.

19. Some held that, except for childless and infirm old persons, those who need assistance remain 19.72 million ； Some held that, those who live in severe natural condition and need migration number 10 million. Some held that, the disabled account for one third of the total below the subsistence line. Some international organizations are in the view that among the poor below the subsistence line, 5.6 million are childless and infirm old people, 9.79 million are disabled, 8 million live in unacceptably severe condition and the rest are mostly plagued by chronic disease and thus have partly or completely lost laboring ability.

20. Personal Analysis on the Mainstream Views First, the magnitude of the poor with annual income below the subsistence line varies little because the composition of this specific group does not change much.

21. Personal Analysis on the Mainstream Views Second, the majority of this group of poor are partly or completely disabled who can not be sufficiently fed by average assistance. Therefore the problem is rooted in inappropriate policies which should be changed to be relief-based.

22. Personal Analysis on the Mainstream Views Third, the relatively stationary composition of this group of poor provides a possibility to apply relief-based poverty reduction approach. It can be inferred that the key to the problem is a portion of government funding to be put to establishing rural low-income security system covering this group.

23. Personal View 1.The 29 million is not stationary but significantly mobile. 1.The 29 million is not stationary but significantly mobile. a. The mainstream point is logic but not realistic. Surveys conducted in provinces revealed that the livelihood subsidy for the childless and infirm poor people is rated at 50-60 yuan per person per month. It can be concluded that the annual net income for these poor has for sure exceeded the subsistence line of 637 yuan per year.

24. b.The magnitude of the poor below the subsistence line is in a dynamic balance Reason for mobility ： Reason for mobility ： The existence of a huge group of poor below the subsistence line.

25. Reason for slowed poverty reduction ： While the number of poor below subsistence line remain huge ： The number of poor lifted out of poverty<<the number returning to poverty Manifestation ： Great annual reduction of the poor below the subsistence line ； While the number of poor below subsistence line is reduced to a certain scale: The number of poor lifted out of poverty<<the number returning to poverty Manifestation: The number of the poor will change little, much close to a constant. “ 大出大进 ” 的动态平衡状态

26. Those returning to poverty is 800 thousand more than those out of poverty in 2003 Annual decrease of the poor population below subsistence line Number out of poverty Number returning to poverty

27. 2.Improve monitoring and evaluation on the poor The adoption of a fixed monetary value as a measurement to annual per capita income and identifying those below it as the poor can only roughly outline the scale but not the precise number of the poor. First, it counts in those inappropriate population; Second, it excludes some of those who should be counted in.

28. Dynamic analysis ： Dynamic analysis ： Analysis on the time length for the poor stuck in poverty may divide them into categories of different poverty severity which require different countermeasures; The poor with their income over 2 years below the subsistence line may be regarded insufficient in food and shelter, and if with over 3 years below the line, they may need relief ； The poor with their income lower than the line just for one year should be regarded as instable in the status of sufficiency

29. This analysis concluded that among the 29 million poor: Those with insufficient provision account for 47% of the total, namely 13 million ， and those really need relief account for 15%, namely 4 million; and the rest account for 53%, namely 15 million who are instable in the status of sufficiency.

30. 3.Carry on development-based poverty reduction approach, consolidate the status of sufficiency so as to break the dynamic balance Whether the 29 million poor can be assisted by development or by relief depends on the financial and human cost required to cover these poor.

31. The way out for the 20 million poor ： First, we should target those who were dropped by the security net or who were not supplied sufficiently, altogether amounting to more than 4 million poor, at fixed time with fixed amount of funding, so as to ensure their income exceeding the subsistence line. Second, we should comprehensively cover the poor with their income lower than 882 RMB yuan and by reducing the poor returning to poverty each year can we finally reduce the total poor below the subsistence line.

32. Rationale of Breaking the Current Dynamic Balance Increased number of the poor out of poverty exceeds those returning to poverty by a larger margin as time goes Number out of poverty Number returning to poverty