Poverty issues and policies in China: the case of Luliang District in Sanxi Province

Abstract

The huge gap in economic development between rural and urban areas in China is gradually being eroded by the introduction of light industries into the traditional agricultural economies of rural areas. This has been especially evident in coastal and suburban regions but there has, as yet, been very little change in the mountainous areas of southwest and northwest China. This study focuses on Luliang District in Shanxi Province in northwest China where the economy remains underdeveloped and where poverty (as defined by daily food consumption and household expenditure on basic needs) is widespread. Data collected at the household level yielded a whole range of indices with which to assess the level of poverty (for example, income, expenditure, cultivable land, taxes paid, subsidies received, employment and education). This has allowed the incidence of poverty to be explored further. The author has related its incidence in Luliang District to three basic factors: the intrinsic nature of the rural households themselves, environmental conditions/geographical location, and the impact of the State's macroeconomic policies. In terms of the last factor, Shanxi Province suffers from the fact that its industrial structure is biased towards heavy industry (based on coal supplies). This has undermined any balanced growth of the regional economy and slowed the industrialization of agricultural enterprises. The farmers' per capita income in the Province is far below the levels of those in most other provinces and the local governments lack adequate funds to attempt any modernization of traditional agriculture. The problem is further exacerbated by the continuing growth of the population. Surplus rural labour is unable to move freely to find non-agricultural work and increasing numbers of households find themselves confronting the prospect of poverty. The author assesses the impact of national economic policies and the State's own anti-poverty policies. In short, China simply cannot support a large population in poverty. The material payment policy, credit funds and tax reduction schemes have had mixed results so far, but the effect of increased prices for agricultural and side-line products has had a more far- 11l reaching effect on poverty. Nevertheless, many households trapped in the vicious cycle of poverty still find their conditions worsening and will need some protection from further harmful readjustments occurring within the national macroeconomy. Unless the government acts carefully in implementing its anti-poverty policies, it may find its scarce resources draining away in ineffectual schemes. ----- ---- ---- -- - - -- - - Show more