China, today, has one of the fastest growing economies in the world. With 1.3 billion people, it also has the largest population on Earth. Hundreds of millions of Chinese live far from the coastal regions generating this new wealth. Hunger, sickness, ignorance, and an early death are too often the fate of those left isolated and poor.

But China has been very successful in reducing the number of people living in poverty. In 1978 there were 250 million, and 25 years later the number was down to 28 million – although this is according to the Chinese Government’s definition of poverty as an income of 66 US cents a day. As World Bank President James Wolfensohn, says: “this is an accomplishment of historic proportions.”

This Life programme looks at how China succeeded in freeing so many people from poverty - and whether it can now use the lessons learned to help poor communities throughout the rest of the country.

In 1978, China introduced a bold, new policy which ended centralized agricultural planning and returned land used for communal farms back to individual families. Freeing the productive capacity of hundreds of millions became the single largest factor in helping China’s rural poor escape poverty.

Policies targeting the poverty of particular regions have followed. “The Southwest Poverty Reduction Project”– initiated by the Chinese Government with support from the World Bank – has provided basic infrastructure development like roads and electricity, allowing new information technologies to link the people with the wider world.

Innovative water management systems have freed the villagers from the daily grind of fetching water. Improved seed and animal stocks have helped increase income. And the project has provided better health care and education.

Another factor has been the flow of the poor rural population to the cities. Around a hundred million Chinese from the countryside are now finding work in China’s wealthier cities - and sending the money back to their home towns. This labour mobility facilitates the flow of labour to the cities - and capital to rural areas.

Leading enterprises that help bridge the gap between agriculture and industry can qualify for special government subsidies – if they process agricultural commodities, engage rural labour in industry, and enlarge markets for rural produce. Called “Long Tou”, or Dragon Heads, they are often run by entrepreneurs with roots in China’s peasant villages.

Dragonhead entrepreneur Su Zhong Jie.

Su Zhong Jie is a dragon head. He remembered the woven grass mats which the farmers used for drying their grain and slept on, on hot and humid summer nights. By adapting these into high quality beach accessories for the international resort set, Mr. Su has created a business with sales last year of over eight million U.S. dollars.

Dr Li Bing Qin, of the London School of Economics, comments: “When China has these entrepreneurs who become rich very quickly, it has a positive effect on people – they offer inspiration for the rest of society to let them see that there is opportunity, real opportunity to become rich, by themselves.

Dr Li Bingqin.

But at the same time, because there’s no well-developed framework for income redistribution, they contribute significantly to the inequality – income and social inequality in China. As a result they contribute to the social instability.”

To encourage a more orderly migration the Chinese government has drawn up a plan for voluntary resettlement. Known as 'Come down from the Mountain', this policy allows those who can’t survive on marginal land to move closer to an urban existence, taking substantial pressure off fragile land better suited to forests than farming. But hundreds of millions are expected to take this route – and hundreds of new cities will have to be built over the next 20 years to absorb rural labour migration.

Foreign Direct Investment – particularly, the setting up of ‘special economic zones’ – is one solution, offering opportunities for new, rural migrants.

Technology transfers like this – coupled with the income from export manufacture – aim to enable China’s rapid movement from an agrarian to industrialized urban society, and have led to a burgeoning domestic market – one that will soon be the largest in the world.

China is also trying to improve conditions in the poorest rural areas. One area targeted is China’s Loess Plateau. The Plateau - an area the size of France stretching over parts of seven different provinces - was once a huge forest.

Loess is a powdery sedimentary soil, dangerously vulnerable to erosion. Thousands of years of human impact and lack of conservation measures have removed the trees and grasses – with catastrophic results.

The Chinese Government, with World Bank loans, has spent a decade and 150 million dollars to begin the rehabilitation of the ecosystem of the Loess Plateau in nine tributary watersheds of the Yellow (Huang) River.

Terracing vast tracks of land considered wasteland for generations is opening up new opportunities for Chinese farmers. And farmers who have the land use rights are more likely to maintain the terraces.

Guo Hai Wang, a farmer in Inner Mongolia, says: “It was really unimaginable. I didn’t dare to dream about it. Before my house was made of clay. Now I have a brick house. These two decades have seen an incredible change.”

For China, with 22 per cent of the world’s population and only 7 per cent of the world’s arable land, the implications for poverty reduction of providing more fertile land are enormous.

The Chinese are continuing to scale up their efforts to end poverty – trying to turn the best local practices into national policies. But now they face a new problem. As in so many other countries, the gap between the rich and the poor is widening. The big question now is – can China bridge the growing gap between those who have benefited from its amazing economic growth, and those who have not?

TRANSCRIPT Read the full transcript of The Real Leap Forward