How China Lifted 100 Million People Out of Poverty

China has transformed from an agricultural society into the world’s second-largest economy that has lifted hundreds of millions of people out of extreme poverty. President Xi Jinping has officially declared a “major victory” over poverty in December 2020.

In China, anyone in rural areas earning less than $2.30 per day along with suffering from severe deprivation of basic human needs like food, drinking water, health, and education is suffering from poverty. While poverty is a multidimensional issue, it is normally measured by income level.

In 1990, there were more than 740 million people in China living below the international poverty line which is $1.90. However, by 2012, the poverty population has decreased to fewer than 90 million. As years went by it continued to fall to 7.2 million in 2016. Overall, decades of speedy economic growth have helped china lift 748.5 million people out of extreme poverty, dropping the poverty rate from 66.3% to just 0.3% shown in Figure 1.

Among the world’s 15 most heavily populated developing countries, China has seen the largest drop in poverty rates. The World Bank recommends using $3.20 and $5.50 per day as a benchmark to assess poverty in lower-middle and upper-middle-income. Figure 2 shows how poverty rates have changed China from 1990 to 2018.

How did China do it?

Firstly, after Mao’s death in 1976, Deng Xiaoping began to reshape the economy. Farmers were granted rights to farm their plots, improving living standards and reducing food shortages. The government has transferred millions of people from remote villages into apartment complexes. Normally, these were built in towns and cities, but at times new villages were built near the old ones. However, there has been some criticism that people have limited choice over whether to shift homes or jobs.

Many also pointed out the reason rural poverty was so widespread was because of Communist Party policies that were implemented in the first place during Mao Zedong’s time. Nonetheless, this success in bringing people out of miserable poverty is not simply down to the government.

Secondly, it opened doors to foreign investments as the US and China reestablished diplomatic ties in 1979. Countries such as the US are eager to take advantage of cheap labor and low rent costs and which results in money coming in. Through the 1990s, China began to clock rapid growth rates and joined the World Trade Organization in 2001. The decrease in trade barriers and tariffs with other countries made Chinese goods available globally.

Last but not least, China is modeling a new front in global economic development. The country’s next chapter in nation-building is unfolding through a massive infrastructure project which is the Belt and Road Initiative. It is known as the new Silk Road which aims to connect half of the world’s population and one-fifth of global GDP, creating trade and investment links that stretch across the world.

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About the Author

Rosemarie Chua is currently a Year 2 student studying Business Economics and Finance. Her go-to motto is, 'The mind is everything; what you think you become.' This quote has kept her pushing herself to become the better version of herself.